Hello, and welcome to our Weekly Report. In this issue: Brazil’s stock market hurt by a strong U.S. Dollar, Why incentives to the oil industry harm Brazil’s economy. And the most important facts of the week.
The week in review
- Economic Indicators. The effects of the 10-day truckers’ strike have begun to appear on Brazil’s economic indicators. The inflation rate
for the month of May was 0.40% – above the market’s projection of 0.29%. Meanwhile, electricity consumption was down by 8.8%, and car sales dropped by 7.1%.
- The rise of the USD. After the USD rose to almost BRL 4 on Thursday, Brazil’s Central Bank decided to intervene and spend USD 20bn in swap contracts. The effect was immediately felt, as the USD crashed 5% on Friday, closing the day at BRL 3.709. Markets predict that the bank will soon raise the benchmark interest rate from 6.5% to 7%, despite its promises not to do so. In the long-term, the BRL is expected to continue to lose value due to electoral uncertainties.
- Oil & gas. On Ivan Monteiro’s first week as Petrobras CEO, Brazil auctioned offshore drilling rights in four deepwater reserves (one of which received no bids). The government raised...