By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – Still trying to adjust to the United States’ election results, the Brazilian foreign exchange rate registered the highest daily appreciation of the U.S. dollar against the Brazilian real of the past eight years on Thursday (November 10th) with the North American currency closing up by almost five percent at R$3.361/US$1. The U.S. dollar closed at its highest rate since July 7th, 2016.
Due to the surge of the U.S. dollar in the foreign exchange rate, Brazil’s Central Bank interrupted its customary reverse currency swap auctions on Thursday. The Brazilian financial institution conducted those operations in recent months with the objective of containing the depreciation of the U.S. dollar against the Brazilian real.
“Emerging economies must seize the opportunity created by the benign period (between the end of one administration and beginning of the next) to implement the necessary adjustments,” said Brazil’s Central Bank president, Ilan Goldfajn, in a conference in Chile on Thursday.
The U.S. dollar also surged against other emerging market currencies, especially the Mexican peso and the South African rand. Thursday also registered volatility in Brazil’s stock market. São Paulo Stock Exchange’s Bovespa Index closed down by 3.25 percent at 62,201 points due to negative domestic and foreign news.
Brazil’s state-owned oil giant, Petrobras posted an unexpected third-quarter net loss of R$16.45 billion. During the third quarter of 2015 company had registered a loss of R$3.8 billion. Retail sales volume declined by one percent in September in relation to August, and now accumulates a 6.5 percent loss during the year, according to the Brazilian Institute of Geography and Statistics (IBGE).
In the foreign front, global markets continue volatile, despite the friendly meeting between outgoing US President Barack Obama and President-Elect Donald Trump on Thursday. Analysts forecast that the turbulence is likely to continue until key financial posts in the Trump Administration are nominated.
The campaign promises of pulling back from trade agreements by the President elect affected negatively U.S. funds which rely on emerging market stocks, which in turn brought down stock markets everywhere, from Latin America to Asia.