Why the delta variant of the coronavirus worries financial markets

Delta variant worries financial market and drives dollar quotation | Photo: Jorge Araújo / Public Photos

Since the beginning of July, the US currency has come close to appreciating 6%; in just under a month, the dollar went from R $ 4.90 to R $ 5.25. The main index of B3, Ibovespa, has fallen by more than 3% in the last 30 days. These fluctuations in the financial market, once again, are called the coronavirus. The key factor at the moment is the advance of the delta variant, which is more transmissible than previously discovered strains and whose cases are increasing in Europe and the United States.

According to Coface’s economist for Latin America, Patrícia Krause, the concern relates to the risk of a brake on the recovery and a slowdown in global economic growth – especially in the services sector, which has a heavy weight and employs a lot, but depends on containment. pandemic to recover. Along with the specter of a new wave of Covid-19 (and new traffic restrictions), Krause believes that there is now also a correction and profit taking by investors who have increased exposure to risk.

“We have already had a big improvement in the market in recent months, there was already a recovery in the stock market everywhere in the world, a very optimistic scenario, so it’s a correction,” he said, when he said. ruled out the perception of a deteriorating trend or further declines.

The devaluation against the dollar, it should be mentioned, was not exclusive to the real. Currencies such as the euro, the pound and the yen have also seen significant devaluations in recent days in response to concerns about the continued economic recovery amid a possible resurgence of the pandemic. “It is not a structural problem due to the country at the moment, it is a fear which haunts the market”, summarizes the strategist of Ativa Investimentos, Luiz Fernando Carvalho.

According to Carvalho, now is the time for volatility, it takes patience, but it still doesn’t turn out to be a long-term move, but a more immediate reaction. “The central banks have already said that they will continue with the normal stimuli, there is not much concern. With the vaccination progressing, this movement tends to recover,” he adds.

The dollar comes back to R $ 5?

The Coface economist believes that once this phase of oscillation has been overcome because of the fear of the delta variant, it is “feasible” for the dollar to return to its level at the start of the month, accommodated by Brazilian monetary policy. and the progress of local vaccination, with the expectation of an adult population immunized with at least the first dose at the end of September.

“With the best domestic scenario and the continuity of monetary policy (the high Selic, which everything suggests will continue in the coming months) this should help a little the real, which was one of the currencies most affected since the start of the Covid “, adds Paula Krause.

For Carvalho, the return to a dollar scenario at R $ 5 also depends on the changes that consistently support him. “We need a fiscal and administrative reform, we need more stability in terms of economic forecasting, of recovery. It is possible, but, for the moment, I think that it can fluctuate in this interval, to a point of accumulation “, reflect.

The assessment of macro strategist at XP Investimentos, Victor Scalet, is that there are also factors of appreciation of the real, insisting that the raw materials exported by the country are still very strong. In the event of advances in the expected agendas in the country, the exchange rate could have an even better scenario.

“We evolve more with external factors [no caso atual, de preocupação com a variante delta] than the locals at this stage, although of course one cannot say that this has no local effect by participating. If we were talking about structural reforms, administrative reform, tax reform that would reduce complexity, without budgetary risk, we could talk about a more appreciated exchange rate, “he said.

Related Articles

Back to top button