Global economic instability, triggered by a second wave of coronavirus contagion, could boost Brazil’s dollar and benefit Bitcoin
The US dollar could reach R$6 with a possible worsening of the post-election economic scenario, and a ’second wave‘ of contamination from Covid-19 could act strongly to slow the economic recovery.
The second wave of Covid-19 has already generated a warning for the global economic recovery, mainly due to the announcement of the lockdown in major European powers such as Portugal and the United Kingdom.
Thus, by December, we can see a decline in several economic indicators, according to Infinox Capital, a future market maker in Brazil.
„Movements like the US dollar, with the price at R$5.70 and the gain, and the sale of the barrel of oil at US$34.00, demonstrate a scenario of attention around the world,“ explains Infinox executive Victor Hugo Cotoski.
Since the announcement of the second phase of restrictive measures of social isolation, the US currency has gained strength against all currencies, only against the real it has appreciated by almost 4%.
Oil, considered a commodity, fell by approximately 20%, which shows a concern due to the consumption of the good, due to the reduction of people circulating with cars and planes, for example.
„At this point, we are already experiencing the second wave of coronavirus, in which we will have more delays in improving economic levels, because of the damage already caused in previous months, and possible large swings in investment portfolios by the end of 2020,“ explains Cotoski.
Currencies: dollar, real, pound sterling, Japanese yen and Norwegian krone
For British Trading, the US Dollar should strengthen as it already has, along with the Japanese Yen, considered a safe, secure, hedge currency.
In addition, it is possible to see a great opportunity in the pound as it is taking shape and Brexit trading, the UK’s exit from the European Union, has been positive for England.
„The Brazilian real and the Norwegian krone, for example, are suffering a great depreciation, because they are currencies that GDP has a significant weight in commodity, so if there is no sale of products, such as steel or oil, there is no entry of dollars, thus causing a cascading effect‘, says Cotoski.
With this a possible appreciation of the US currency (currently falling from R$5.70 to R$5.36 at the time of writing), the price of Bitcoin tends to reach new historical levels in the country, since BTC has its value measured by the dollar.
Currently quoted at R$ 15,335 (R$ 82,356), with a worsening economic scenario and an increase in the dollar, the price of Golden Profit can easily rise from R$ 90,000 even if, in the dollar rate, the cryptoactive is in the range of US$ 15,000 to US$ 16,000.
American and Brazilian markets
In record time, the American market had the largest injection of fiscal stimulus packages in human history, coming out of the crisis benevolently.
„American stock indices, such as the NASDAQ, which measures the average price of the 100 largest technology companies in the United States, not only recovered, but generated new historical records for companies such as Apple, Amazon, Netflix and Google, which set records in sales and revenues, even during the entire lockdown period at the beginning of the year,“ explains Sam Chaney, executive responsible for the global expansion of the Infinox group.
The US elections could set the course for the world’s largest economy, if there is a victory for Democrat Biden, who appears ahead of Trump in the polls, it could generate a new series of lockdowns and the failure to approve more stimulus packages for the economy by the end of the year, resulting in the suffering of the second wave of the pandemic.
Brazil must follow the same path as major importers, such as China and the United States, because if there are stoppages, importers will stop buying, there will be a drop in consumption, there will be a decrease in the volume of dollars entering the country – which could result in a new wave of layoffs.
According to Infinox, because it is an emerging country, the consequences must be greater when compared to major powers and the debt and GDP ratio can exceed 100%.
„If this economic scenario happens, it will be like a domino effect, and Brazil will be in the middle. With this, we should see the Brazilian currency quoted above R$ 6.00, regardless of the political or fiscal environment of our country,“ concludes Cotoski.
Currency market in Brazil
With the arrival of volatility in the market, due to the facts mentioned above, the volume of trading in the currency pairs in which Infinox acts as market maker, providing liquidity to institutional and retail investors in Brazil, should increase and continue to break records.
„We should see many trades in the EURUSD (EUP), where there is a trade of the US dollar per euro, and mainly in pairs such as the Japanese yen (JAP) and the dollar per pound (GBR), as these are the safe currencies in which volatility should appear. When it comes to the pound, because of the progress of the Brexit steps, the manager or investor should know about our role in the national territory, in providing liquidity and depth in trading these currencies, because we are acting throughout the trading session,“ explains Chaney.