The dollar closed higher on Wednesday (12/11), as financial markets reflected on comments from Central Bank (BC) Governor Gabriel Garipolo, as well as news from the US that the end of the government shutdown was imminent and that coffee tariffs could be lowered.
dollar
- The North American currency rose 0.37% to close at 5.292 reais after five consecutive declines.
- At the highest exchange rate of the day, the dollar reached 5.302 reais. The lowest price was R$5.266.
- A day earlier, the dollar had closed 0.64% lower at R$5.272. This is the lowest price since June last year.
- As a result, the US currency will accumulate a loss of 1.63% against the real in November and 14.36% in 2025.
ibo vespa
- Ibovespa, the main index of the Brazilian Stock Exchange (B3), is on track to end this Wednesday’s session lower, interrupting a series of gains.
- At the end of the session at around 5:00 pm (Brasilia time), Ibo Vespa fell by 0.32% to 157.2 thousand points.
- The previous day, this indicator rose by 1.6% and closed at 157.7 thousand points. This was the 12th consecutive record end and the 15th consecutive increase in the index during a trading session, but this positive sequence has now been interrupted.
- As a result, the Brazilian Stock Exchange gained 5.49% for the month and 31.15% for the year.
- Even if it closes in the red, Ibo Vespa will lose the opportunity to achieve an unprecedented 16 consecutive trading day high, which has lasted for 31 years since 1994.
“B.C. can’t fight with data,” Garipolo said.
On the domestic scene, a big highlight of the day was the participation of BC President Gabriel Garipolo in two activities in São Paulo.
The Head of the Financial Authority took part in the presentation on the Financial Stability Report (REF) at the Investment Forum 2026 – Global Trends in Investments, organized by Bradesco Asset Management in the capital of São Paulo, as well as taking part in the discussion on the panel “Monetary Policy in Brazil”.
B.C.’s Monetary Policy Committee (Copom) last week decided to keep the benchmark interest rate at its current level of 15% a year, the highest level in nearly 20 years since 2006. Markets are already expecting the Selic rate cut cycle to start early next year.
This Wednesday, Prime Minister Garipolo refuted criticism of the monetary authorities for their decision to keep the base interest rate (Selic) at a high level in order to curb domestic inflation.
“Expectations have been de-anchored that indicate that inflation will not be on target for a significant portion of the next few years, so B.C. has been very cautious about the security of keeping interest rates at a restrictive level for this very long period of time to ensure that monetary policy is effective,” Garipolo said.
“We understand that it is legitimate for all sectors of society to have a say in monetary policy. Everyone can fight BC, but BC cannot fight over data. Of all public institutions, BC is probably the one with the clearest purpose. We have a clear inflation target.”
Garipolo was asked about criticism of B.C.’s more restrictive monetary policy. After announcing Selic’s 15% annual rate, last week, Institutional Relations Minister Gleij Hofmann labeled COPOM’s position as “out of touch with reality” and “detrimental to Brazil.”
“If we say that the convergence to inflation is slower and more gradual, those who see a more benign trajectory will say that we are not recognizing reality or that it is sabotage,” Garipolo said. “If you come to a certain realization, (inflation) growth is decreasing, which on the contrary says that they already want to perform due to pressure or something. ”
Commenting on the criticism, the BC president added: “If we do a good job, we will be criticized equally by these two extremes.”
In a separate news conference earlier in the day, Garipolo said Brazil’s inflation rate was moving “slowly and gradually” toward B.C.’s 3% target. “The data shows that inflation is moving toward convergence on target, albeit slowly and gradually. It’s clear that a slow and gradual process is very uncomfortable for B.C.,” he acknowledged.
“On the other hand, this gradualism helps reduce other risks, namely the fear that a more severe decline in the economy will occur. The data shows that the economy is slowing and growing at a lower rate,” the B.C. president concluded.
Service sector growth
Still on the domestic market, the market also reflected on data released this morning by the Brazilian Institute of Geography and Statistics (IBGE) on the performance of the country’s services sector in September.
IBGE said service volume increased by a seasonally adjusted 0.6% month-over-month. This was the eighth consecutive positive result and the cumulative growth rate for the sector was 3.3%. As a result, the services sector is 19.5% above pre-pandemic (February 2020) levels and hit a new record high this month.
In non-seasonally adjusted terms, service volume increased by 4.1% compared to September last year, marking the 18th consecutive positive rate. Year-to-date growth is 2.8% and 12-month growth is 3.1%.
The sector’s growth in September was 3 out of 5 activities, with particular emphasis on Transport+ (1.2%). Other gains came from information and communications (+1.2%) and other services (+0.6%). Meanwhile, professional, administrative and complementary services (-0.6%) and family services (-0.5%) decreased in the same month.
Coffee prices will be discounted
Externally, investor attention turned to the United States. U.S. Treasury Secretary Scott Bessent confirmed in an interview with Fox News that President Donald Trump’s administration will announce lower trade tariffs on coffee, bananas and other items imported into the country.
The statement echoes what Trump himself said in an interview with Fox the day before. Brazil is the world’s largest exporter of coffee, with the United States being one of its major sales destinations. According to data from the International Coffee Organization (ICO), around 20% of Brazil’s coffee exports go to the North American market.
“In the next few days, we will reduce some of the tariffs on coffee and coffee will come in (in america),” Bessent said in an interview with Fox News’ Ingraham Angle. “We’re going to address all of this quickly. It’s surgical, it’s aesthetically pleasing, but the cost of living is much lower today.”
Like President Trump the day before, the U.S. Treasury Secretary did not provide details of the measures, including the size of the tariff cuts or when they would be announced.
The White House’s new position on coffee tax was announced in the context of recent diplomatic and commercial rapprochement between the United States and Brazil, epitomized by meetings, conversations, and nods between President Trump and President Luiz Inacio Lula da Silva (PT).
Shutdown is coming to an end
Markets also remain focused on the United States as they await an end to the government shutdown, which lasted more than 40 days and is the longest in the country’s history to paralyze widespread branches of the U.S. government.
After Senate approval, the U.S. House of Representatives is expected to vote on a deal that could end the shutdown this Wednesday. On Monday (Oct. 11), Republican and Democratic lawmakers reached an agreement on the deal, which was approved by the Senate on a 60-40 vote.
The proposal provides for an interim budget that would provide federal funding through January 2026, in addition to broad-based funding for Congress, the Department of Agriculture, and programs for U.S. veterans.
The document passed the Senate after five weeks of negotiations between Republican representatives and centrist Democrats.
On Tuesday (11/11), President Donald Trump congratulated House Speaker Mike Johnson and Senate Majority Leader John Thune on their approval of legislation to reopen the federal government.
analysis
The dollar experienced a day of “technical correction” after falling more than 2% in recent trading, according to Nomad investment specialist Bruno Shahini.
“This move comes amid hopes for a recovery in U.S. economic data as the government shutdown lifts, creating a sense of caution in the market and causing investors to reduce their positions following a series of strong reals,” Shahini said.
Still, the analyst said, “domestic interest rate differentials remain a supportive factor for the Brazilian currency. The Copom minutes and IPCA decline reinforce the perception that the Selic rate cut cycle should only begin in 2026, and interest rate differentials need to remain as an important support for the Brazilian currency.”
About The Author
