Security and Fiscal Risk: The Impact of GLO and Foreign Exchange on the Economy

The proposal to deploy the Armed Forces in joint actions with states to combat organized crime and classify factions as terrorists has reignited crucial debates on institutional stability and the business environment in Brazil. This movement occurs at a sensitive time for local assets, pressuring the exchange rate in a scenario where the commercial dollar closed at R$ 5.1859, accumulating a 1.58% rise over 7 days and 0.43% over 30 days. Public security discussions now directly integrate country-risk calculations, influencing foreign capital appetite and transaction costs in the real economy. Inflation measured by the 12-month IPCA stands at 4.44%, while the Selic interest rate is maintained at 14.00% per year, creating a liquidity-restricted environment where regulatory or political shocks generate immediate market volatility. This marks the seventh consecutive negative news item of the week connecting institutional instability, fiscal risks, and exchange rate pressures, altering systemic risk perception and raising capital-raising costs. Over a 30-day horizon, heightened exchange rate volatility is projected, with the dollar oscillating between R$ 5.10 and R$ 5.25. In 90 days, fiscal impacts are expected to emerge in state primary reports, increasing scrutiny from rating agencies, while the 180-day outlook focuses on the effectiveness of these joint actions in unlocking investments or adding budgetary rigidity.