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Dollar drop: time to celebrate or keep holding on?

While we follow the growth of the asset tokenization market, the country lives with another good news: the steady fall of the dollar in 2023.

O dollar price reached 4.91 in mid-April, a appreciation of the real of 5.3% compared to the closing of 2022 and the lowest dollar value since June 2022 and the drop continues, reaching BRL 4.77 on June 19, the lowest value since May 2022.

On the other hand, the appreciation of the real in 2023 is a reflection of a set of good news that tend to consolidate over time and improve Brazil’s image for investors.

Good news follows one another and the most important point is that it is for the long term – a crucial issue will be the behavior of the Selic rate.

So is it time to invest or wait for the facts to settle and we have a more solid scenario?

BLOCKBR, a native web 3.0 company, will talk about the fall of the dollar, how sustainable this behavior is and how it affects your investments!

WHY DID THE DOLLAR FALL?

NEW BRAZILIAN FISCAL FRAMEWORK

The fiscal framework is the set of guidelines aimed at regulating the state’s indebtedness and seeking a balance between revenue and expenditure.

The newly elected government’s fiscal framework project was seen with distrust regarding the new rules – which is natural, considering a new government and such a sensitive issue for the country’s accounts – and this forced a speculative rise in the dollar.

However, the project was well received by the financial market and that, in addition to discouraging the outflow of dollars from the country and maintaining the stability of the real, transmitting security to investors and helping to maintain the supply of dollars in the country and to value the real.

STABILIZATION OF INTEREST IN THE UNITED STATES

Higher interest rates in the US make fixed income investments more attractive in that country – one of the safest economies in the world, even in difficult times – and cause dollars to leave Brazil to invest in the US, devaluing the real.

The brake on interest rate hikes in the US that has been carried out by the US government will make Brazilian interest rates more interesting again.

HIGH INTEREST RATE IN BRAZIL

Brazilian real interest rates – the difference between the Selic rate and projected inflation – are among the highest in the world. To give you an idea, the nominal interest rate in March/2023 was 13.7% and the inflation projection was 5.6%, generating a real interest rate of 8.1%.

This makes the country a haven for foreign investment, especially when the United States lowers interest rates. With more dollars coming in, the money supply increases and the dollar rate drops.

Fiscal reform and tax reform will provide more stability to businesses and this will make the Selic rate drop in the medium and long term, but it will hardly cease to be attractive for investments in the Brazilian financial market, except for a new and strong round of high interest rates in the US ).

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CONSEQUENCES OF THE DOLLAR’S FALL ON THE ECONOMY

LOWEST PRICES ON IMPORTS

A lower dollar is at the center of the imports account, whether retail or large sectors, such as part of the gasoline we consume, the wheat that is essential for food, electronic components and production goods, among others.

Even for exporting sectors such as agribusiness, the lower dollar reduces the value of bills when buying pesticides, machinery and technologies abroad.

MINOR RESULTS FROM EXPORTS

In exports, the appreciation of the dollar boosts revenue in reais, but even in agribusiness – the most exporting sector – and during the US currency’s downward trend, exports from January to May 2022 were 5.8% higher than in the same period of 2022.

The homework for those who export and will have a lower result in reais is to use the appreciated real to gain efficiency:

  • Importing with better prices;
  • Improving internal management mechanisms;
  • Raising funds more quickly and with greater liquidity.

CONSEQUENCES OF THE DOLLAR'S FALL ON THE ECONOMY

HOW THE LOWER DOLLAR AFFECTS INVESTMENTS

COMPANY SHARES

Shares of importing companies tend to appreciate with the reduction in disbursements in reais to pay for imports, which causes an increase in profitability. Exporting companies, on the other hand, have reduced revenues in reais.

On the other hand, in both cases, it is possible to preserve or improve profitability by paying less reais for imports (mainly in taxes and fees).

PROPERTY FUNDS

The lower dollar influences the entire production and supply chain of the civil construction market, benefiting real estate funds and, in particular, those that invest in the construction and sale of properties.

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FIXED INCOME PRODUCTS

With the dollar low, consider investments in local fixed income, such as CDB (Bank Deposit Certificate), LCI (Real Estate Letter of Credit) and LCA (Agribusiness Letter of Credit).

These investments offer fixed and predefined returns. An alternative to investing with more security, profitability above the average of the traditional market is to search for tokenized fixed income assets on recognized tokenization platforms such as BLOCKBR.

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WHAT IS THE FORECAST FOR THE DOLLAR IN THE NEXT MONTHS

As we know, the world economy is a large system where important gears can completely change the course of fundamental indicators such as the appreciation of the dollar, the crisis in Eastern Europe and the failure of medium-sized North American banks.

On the other hand, there is a particularly positive context, which is rarely seen in Brazil and which could help keep the dollar low: the coming together of major economic and political transformations.

  • New fiscal framework and good market receptivity;
  • Current tax reform;
  • Resumption of economic growth;
  • Policy of continued reduction of nominal interest rates.

We can consider that this favorable scenario for the real can be maintained for a longer time if these conditions are maintained and if it translates into economic stability and sustained growth.

INVEST AND EARN MORE WITH TOKENS ON BLOCKBR!

Buying token is not complicated if you invest with someone who makes it easy! Just open an account with a qualified asset tokenization company and create a digital wallet to store your applications.

Access our token marketplace, learn about the most varied offers and choose the ones that align with your investor profile. And you can start investing in tokens with little, from 50 reais!

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BLOCKBR Digital Assets is a fintech native web 3.0 that brings technological innovation and digital knowledge to transform physical assets into digital ones, in the asset tokenization process.

The supply of tokenized assets is democratic and decentralized, which makes the way of investing safe, simpler and more efficient.

We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.

Come tokenize your business and put it on a higher level in the market!

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