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The real depreciates by 0.5% and Brazil falls in line with other emerging countries.

Gabriel Micillo•Friday, February 23, 2024•2 min read

The real depreciates by 0.5% and Brazil falls in line with other emerging countries.

On Friday, there was an increase in the value of the dollar compared to the previous day.

The US dollar closed at 4.98 Brazilian reais on average, representing a change of 0.42% compared to the previous day’s figure of 4.96 reais.

Considering the data from the last seven days, the US dollar has seen an increase of 0.28%; however, over the past year, it still shows a decrease of 3.02%.

Compared to previous days, it marked three consecutive sessions with positive digits. Regarding the volatility of the past few days, it stood at 5.91%, which is clearly lower than the annual volatility figure (10.74%). Therefore, in this latest phase, it is experiencing fewer fluctuations than expected.

The Brazilian economy positioned itself as the fastest-growing in Latin America driven by the agricultural sector and exports; however, the National Confederation of Industry (CNI) estimates that this year will not see a repeat of this situation due to the lack of a solid foundation.

The CNI believes that the international economic context will prevent the same historical increases as last year and expects a slowdown of up to 0.2 percent.

Regarding the economy, like other countries in the region, Brazil has had to face the monster of inflation, which rose to as high as 11 percent in 2022.

The landscape becomes more complicated with the recent change in the country’s politics, as Luiz Inácio “Lula” da Silva assumed a new presidential term, the third in his lifetime, in a context where the economy shows improvements but pandemic aid and increased social benefits have created a significant fiscal hole that must be addressed with spending reductions and tax hikes.

The tax on investment funds for Brazil’s super-rich, implemented by President Luiz Inácio Lula da Silva’s government, allowed January’s tax collection to be the best in history.

The increase in tax collection, which nearly reached 7% year-on-year, is considered a key element for the goal of zero deficit set by Finance Minister Fernando Haddad for 2024, within the new fiscal framework. This framework replaced the public spending ceiling for 20 years that was in place from 2016 until last year. This was indicated by the Receita Federal, the tax collection agency under the Ministry of Finance.

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Gabriel Micillo
Gabriel is a certified public accountant graduated from UNNE (National University of the Northeast, Argentina) and a software developer, currently pursuing a Master's degree in Finance and Economics. With nearly 8 years of experience working for accounting firms and brokerage firms. Concurrently, he has produced economic and financial reports on the current state of regional economies for the clients of the establishments where he has worked. Additionally, he assisted colleagues like Ignacio Teson in the drafting and editing of articles on similar topics in English language.
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