{"id":92648,"date":"2025-01-23T15:42:05","date_gmt":"2025-01-23T18:42:05","guid":{"rendered":"https:\/\/murray.adv.br\/?p=92648"},"modified":"2025-01-23T15:42:08","modified_gmt":"2025-01-23T18:42:08","slug":"trumps-trade-stance-eases-pressure-on-brazilian-real","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/trumps-trade-stance-eases-pressure-on-brazilian-real\/","title":{"rendered":"Trump\u2019s trade stance eases pressure on Brazilian real"},"content":{"rendered":"\n
Reduced emphasis on tariff policies at the start of the new U.S. administration is providing support for Latin American currencies<\/strong><\/em><\/h6>\n\n\n\n

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01\/23\/2025<\/p>\n\n\n\n

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A softened outlook on U.S. trade tariffs under President Donald Trump contributed to a significant drop in the dollar on Brazil\u2019s local market, with the currency falling below R$6 to close at its lowest level since November 27. This date marked the announcement of Brazil\u2019s fiscal measures package on national television.<\/p>\n\n\n\n

The real\u2019s strengthening was further supported by reports of foreign capital inflows into Brazil and the unwinding of short positions established during last year\u2019s market turbulence. The Brazilian real emerged as the best-performing currency among the world\u2019s 33 most liquid currencies on Wednesday (22).<\/p>\n\n\n\n

By the end of the day, the exchange rate per U.S. dollar had dropped 1.40% in the spot market, closing at R$5.94. Meanwhile, the euro fell 1.38% to R$6.19. The U.S. currency also weakened against other emerging-market currencies, especially in Latin America, losing 0.82% against the Mexican peso, 1.26% against the Chilean peso, and 1.15% against the Colombian peso.<\/p>\n\n\n\n

On Tuesday evening, in the Oval Office, Mr. Trump threatened to impose 10% punitive tariffs on China, citing an influx of the opioid fentanyl, which he attributed to routes through Mexico and Canada. While the market had anticipated tariffs as high as 100%, the lower rate provided relief, particularly as no additional tariff measures were announced during Mr. Trump\u2019s first days in office, a move that many had feared.<\/p>\n\n\n\n

Market sentiment<\/strong><\/p>\n\n\n\n

Huang Seen, fixed-income and multi-market director at Schroders Brazil, said market participants had positioned themselves for a harsher trade policy, expecting Mr. Trump to begin his term with sweeping tariff measures.<\/p>\n\n\n\n

\u201c(Leading up to Mr. Trump\u2019s inauguration) There was significant long positioning in the dollar, both against emerging-market currencies and those of developed nations. The risk was clear: if no tariffs were announced immediately, we could see a reversal or unwinding of these dollar positions. The last three days suggest that\u2019s precisely what is happening,\u201d Mr. Seen said.<\/p>\n\n\n\n

Schroders maintains a cautious but constructive view of the Brazilian real, particularly against a basket of non-dollar currencies. Mr. Seen noted that the Central Bank\u2019s strict monetary policy supports holding long positions in the real while avoiding Brazilian equities, even with their attractive valuations. \u201cThe challenging economic environment will likely weigh on companies,\u201d he added.<\/p>\n\n\n\n

Luis Garcia, chief investment officer at SulAmerica Investimentos, observed that Mr. Trump has been focusing more on immigration issues than on trade tariffs. \u201cThis shift in focus has relieved pressure on currencies tied to major trade markets, particularly those linked to China,\u201d he said.<\/p>\n\n\n\n

Mr. Garcia added that, compared to Mexico, Brazil has been less affected by Mr. Trump\u2019s immigration agenda, making the real more attractive to investors. \u201cEmerging-market investors often rotate between countries, and the real has become more appealing now, especially given Brazil\u2019s interest rate environment and the Central Bank\u2019s recent moves to curb volatility,\u201d Mr. Garcia explained.<\/p>\n\n\n\n

Foreign capital inflows have also boosted Brazil\u2019s assets. Over the last four trading days, the B3 stock exchange saw foreign inflows exceeding R$10 billion, largely driven by Cosan\u2019s sale of Vale shares. Additionally, Central Bank data showed a net positive financial flow of $1.2 billion between January 13 and 17, with a total net inflow of $806 million during that period.<\/p>\n\n\n\n

While the currency markets experienced notable gains, the Ibovespa saw a more subdued performance, closing down 0.3% at 122,972 points. Losses in Vale\u2019s stock, which dropped 2.52%, and Petrobras shares, down 1.01% (ordinary shares) and 0.56% (preferred shares), weighed on Brazil\u2019s benchmark stock index.<\/p>\n\n\n\n

In the commodities sector, uncertainty about U.S. tariff policies has led some firms to reduce exposure. Ricardo Kazan, commodities manager at Legacy Capital, described the environment as highly uncertain. \u201cWe don\u2019t yet know if tariffs will be imposed or the rationale behind them. They could serve as a negotiating tool for the fentanyl issue or to address the U.S. trade deficit,\u201d Mr. Kazan said, adding that he expects some form of tariff to be implemented.<\/p>\n\n\n\n

The interest rate market also reflected the dollar\u2019s decline, with future rates closing lower. The January 2026 interbank deposit (DI) rate fell from 14.96% to 14.92%, while the January 2031 DI rate dropped from 15.03% to 14.96%.<\/p>\n\n\n\n

\u201cConsidering how prominent tariffs were during Trump\u2019s campaign, it\u2019s surprising they haven\u2019t been emphasized more since his inauguration,\u201d noted Citi\u2019s global macro strategy team in a report. The bank suggested that broad-based tariffs are now less likely, while specific measures targeting Canada and Mexico would likely remain below 25%. However, China is expected to remain a priority for Mr. Trump\u2019s trade policy in his second term<\/p>\n\n\n\n

*By\u00a0Arthur Cagliari,\u00a0Gabriel Roca,\u00a0Bruna Furlani,\u00a0Gabriel Caldeira\u00a0e\u00a0Maria Fernanda Salinet \u00a0\u2014 S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Reduced emphasis on tariff policies at the start of the new U.S. administration is providing support for Latin American currencies 01\/23\/2025 A softened outlook on U.S. trade tariffs under President Donald Trump contributed to a significant drop in the dollar on Brazil\u2019s local market, with the currency falling below R$6 to close at its lowest […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25811,25810],"class_list":["post-92648","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-eases-pressure-on-brazilian-real","tag-trumps-trade-stance"],"yoast_head":"\nTrump\u2019s trade stance eases pressure on Brazilian real - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/trumps-trade-stance-eases-pressure-on-brazilian-real\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump\u2019s trade stance eases pressure on Brazilian real - 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