INSUBCONTINENT EXCLUSIVE:
The dollar closed slightly higher against the Brazilian real on Tuesday, October 1st
sparked concerns about potential regional conflict expansion
The fear of wider involvement in the Israeli-Palestinian conflict caused oil prices to surge.Simultaneously, the dollar gained strength
Treasury yields also declined as investors prioritized safety in their financial decisions.The commercial dollar rose by 0.31% against the
real, reaching R$ 5.463 for buying and R$ 5.464 for selling
On the B3 stock exchange, the first-maturity dollar futures contract increased by 0.12% to 5,479.69 points.Earlier in the day, the dollar
briefly dipped against the real
This initial decline reflected the perception that the interest rate difference between Brazil and the United States favored the
currency soon reversed course and began to strengthen.News of worsening conditions in the Middle East prompted investors to seek safer
The Iranian attack on Israel later confirmed these fears, intensifying the flight to safety.Geopolitical Tensions and Currency
FluctuationsIn Brazil, this risk aversion led to a faster appreciation of the dollar against the real
It also caused a shift in DI rates to positive territory
The spot dollar reached its peak at R$ 5.4794, marking a 0.56% increase.Thiago Avallone, a foreign exchange specialist at Manchester
He noted that during wartime events, investors tend to seek more protected and secure markets.This trend often leads to a flight towards the
impacts on exchange rates will depend on further escalation
The involvement of countries outside the region could prolong these effects.Felipe Izac, a partner at Nexgen Capital, commented on the
He emphasized that geopolitical tension is never positive for markets
Initial reactions often involve exaggerated moves in oil prices, gold, and U.S
Treasury bonds.Izac warned that a long-term escalation, especially beyond the Middle East, would have negative global consequences
This cautious outlook reflects the broader market sentiment as investors navigate uncertain geopolitical waters.
