Copom cut the basic interest rate (Selic) by 0.75 percentage point, from 3.75% to 3% per year. It is the lowest level since the beginning of the historical series, in 1996. The committee argues that, at the moment, the economy requires an “extraordinarily high monetary stimulus”, but left open the possibility of further interest rate cuts.
BNDES will allocate R$ 4 billion ($ 728 million) to fund managers focused on small business financing. The BNDES informed that it will invest in up to 10 private credit funds, these funds seek to provide an alternative to bank loans for companies that are too small to finance themselves by issuing debt or offering shares
The exchange rate rally gained a new mark on Wednesday. With the market pressured by the interest rate cut, the Selic, the dollar climbed and registered a new nominal record against the real. In the session, the tourism dollar advanced 0.3%, ending the day quoted at R$ 5.93 ($ 1). In addition to lower interest rates, which make investments in Brazil less attractive and lead to currency flight, the market also increased tension with the worsening of the country’s risk assessment.
The rating agency Fitch Ratings reported on Tuesday that it had revised the outlook for Brazil’s sovereign credit rating to “negative”, citing a deterioration in the country’s economic and fiscal scenario and renewed political uncertainty. Doubts about the duration and intensity of the spread of the coronavirus in Brazil were also raised.
The Ibovespa closed higher on Tuesday, after two consecutive sessions of losses, with the second trading session of May on the São Paulo stock exchange supported by a more positive external news about treatments against Covid-19. The Ibovespa rose 1.22% to 79,839.25 and the financial volume totalled R$ 18.4 billion ($ 3.4 billion).
Foreign investors entered liquidly with R$ 695.9 million ($ 127 million) from the secondary segment of B3 on April 29. Individual investors withdrew R$ 1.01 billion ($ 185 million) on the same day and institutional investors entered with R$ 368 million ($ 67 million). In the month, the balance of foreign investors was negative by R$ 4.36 billion ($ 7.93 million). In the year, the output totals R$ 68.69 billion ($ 12.5 billion).
The Senate approved on Saturday (2), with 79 votes in favour and only, on the contrary, a financial aid of R$ 125 billion ($ 22 billion) to states and municipalities to combat the effects of the pandemic of the covid-19. The amount, provided for by the Federative Program for Confronting the Coronavirus (PLP 39/2020), includes direct transfers and debt suspension. The proposal will allocate R$ 60 billion ($11 billion) in four monthly instalments.
The coronavirus crisis can take up to $ 90 billion from the pockets of Brazilians this year. The retraction will lead to reduced demand and production in several sectors, undermining the strength of the post-pandemic recovery. Areas such as tourism and transport already feel the contraction in demand but based on the drop-in consumption observed in other crises, the tendency is for the decline to spread to other segments, even in the food sector.
The government has linked financial aid to states and municipalities during the coronavirus crisis, with legal action being requested to suspend payment of instalments of the Union’s debts. The clause consists of a project negotiated between the team of the Minister of Economy and the President of the Senate. The aid package reaches R$ 120 billion ($ 21.8 billion). Due to the government’s demand, financial assistance will only be guaranteed after withdrawal of lawsuits.
The Ibovespa closed this Thursday (30) with a fall of more than 3%, but it did not prevent the index from closing April with gains of 10.25%, with investors positively reflecting expectations of the reopening of large economies after tough measures of social isolation due to the coronavirus pandemic and with hopes of advancing the treatment of Covid-19. Despite the strong appreciation in April, the index still accumulates losses of 30% in 2020.