Expecting the impact of the coronavirus on inflation, the Brazilian Central Bank’s Monetary Policy Committee (Copom) will hold, on Tuesday (17), the second meeting of the year to define the rate Selic, currently at 4.25% per year. The spread of the disease and the instability of the financial market in the last week have led to uncertainty about the fate of basic interest rates in the economy. At the beginning of last week, most of the financial institutions consulted by the Central Bank’s bulletin predicted the maintenance of the Selic, which is at the lowest level in history.
To try to contain the dollar’s boom, the Brazilian Central Bank already injected $ 15.245 billion in resources in the foreign exchange market in March. The dollar has been rising around the world amid investors’ search for protective assets. Finally, in Brazil, the turbulent political scenario around the tax budget has served as a stimulus for an even more expensive dollar.
American Airlines decided to suspend 75% of its international flights, including all routes to Brazil, for 51 days, counting from this Monday (16). The decision comes in response to the decreasing demand for flights and amid restrictive measures adopted by the American government due to the advancement of the coronavirus. The country closed its borders to European countries and recently declared a state of national emergency.
The Amazon Biotechnology Center (CBA) wants to enable the creation of a new industrial pole in the state of Amazonas. The idea is to bring together, in a structure similar to that of the Manaus Free Trade Zone, companies that add value to products that have, as raw material, the region’s biodiversity. The Amazon Biotechnology Center has, among its main objectives, to develop new technologies based on integrated research, which will be carried out directly and indirectly by a network of regional and national laboratories.
The government’s plan to tackle the effects of the global turmoil – caused by the coronavirus outbreak and exacerbated by tension in the oil market – includes accelerating the reform agenda, actions by the Central Bank to contain the dollar and run down the credit channel and the strengthening of public banks (Caixa and Banco do Brazil) in lines of assistance to companies. In a meeting with the economic team, Guedes made it clear that he has no “plan B” for the economy and that the strategy is to follow the initial plan already outlined and take advantage of the unfavourable international winds to “deepen it”.
President Jair Bolsonaro announced this afternoon (12) that he will allocate R$ 5 billion ($ 1 billion to fight the coronavirus in Brazil. He said he will sign a Provisional Measure tomorrow, Friday (13) authorizing the action. Bolsonaro cited the Brazilian stock market crash, which plunged 14.78% in the afternoon after two temporary stops, known as “circuit breakers”, and said that the country has a locked budget.
The country risk measured by Brazil’s 5-year CDS has jumped 58%, to 356 points according to data compiled by Markit. A sign that the movement has to do with domestic factors, the 58% increase in Brazil’s country risk is superior than seen by other comparable emerging countries in the same period. The spread of contracts in Mexico increased by 39.1% in the period, while those in Colombia, 26.7%. Russia (19.8%), South Africa (12%) and Turkey (14.05%) also had minor variations in the period.
The Brazilian Central Bank held on Thursday (12) several dollar auctions that helped to contain the buyer impetus in the US currency. The commercial dollar opened at R$ 5.00, reaching a maximum of R$ 5.0280, amid the defeat of the government in Congress with the overthrow of President Jair Bolsonaro’s veto. But it helped the gains over the trading session. Even so, the commercial dollar rose 1.377% to R$ 4.784 in the purchase and to R$ 4.7857 in the sale, still renewing the historical high closing.
The airline Azul reported a loss of R $ 2.3 billion ($ 460 million) in the fourth quarter of 2019, affected by expenses considered non-recurring, and suspended the projections for 2020, in addition to adopting other measures, due to the uncertainty related to the impact of the propagation of the coronavirus. Azul also said in a statement that it is monitoring the potential impact of Covid-19 on its 2020 results and has decided to suspend projections for the year.
Ports of the State of Paraná (south of Brazil) had an increase in cargo handling in the first two months and, according to the port administration, the coronavirus did not affect the operation. In January and February, about 7.3 million tons of products entered and left the country through the state’s terminals, an increase of 1% compared to that recorded in the first two months of 2019, when the movement totalled 7.2 million tons.