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Financial News: BRAZIL: Ibovespa Falls To Lowest Level Since November

BRAZIL: Ibovespa Falls To Lowest Level Since November 2017

06/13/2018 - 19:51:00 (RTTNews)

(RTTNews) - Ibovespa, the benchmark stock index in Brazil, closed down 0.86% at 72,122.13 points Wednesday - to the lowest closing level since November 30 (71,970.99 points) - reflecting the indication of the U.S. Federal Reserve (Fed) that it should make two more rate hikes this year. A higher interest rate in the United States is negative for emerging countries such as Brazil, as it may attract investments that would go to these markets.

"The Ibovespa traded today largely on the Fed, which confirmed two more interest increases," said H. Commcor's operations desk manager, Ari Santos. The U.S. monetary authority raised interest rates today and said it expected two more highs, which could lead to a total of four rate hikes this year, clarifying a key doubt among investors.

Fed signaling impacted not only the stock market but the foreign exchange market in Brazil, with the locally traded U.S. dollar accelerating 0.10% over the Brazilian real, to R$ 3.7150. The Brazilian Central Bank intensified currency swap auctions in a bid to curb USD appreciation, but that also reflected in the Ibovespa, which decelerated the fall after receding more than 2% in the lowest level of the day.

According to Spinelli Corretora's chief economist, Andre Perfeito, the central bank's strong performance in the exchange rate has limited investor operations, which eventually leave the stock market.

"The more distorted the dollar becomes, the more the investor's mistake will be the Ibovespa, which will respond to interventions," he said.

Among the major falls in Ibovespa were Cielo (-5.39%), Ultrapar (-4.18%) and BRF (-3.30%), which reflected the deactivation of the production line of turkey meat at the Mineiros (GO) unit. Meanwhile, Eletrobras shares (ELET3 +3.33%, ELET6 +5.11%) and Copel (+3.67%) closed higher.

For Thursday, just as it has been seen in recent days, analysts continue to predict volatile markets, with investors still digesting Fed signals, while there is no positive news on the domestic market either.

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