Fleeing Debates and the Invisible Cost: How Political Absence Raises the Risk Premium

This deterioration of the political and institutional environment connects directly to the recent history of our analytical archive, which already warned about how heated electoral rhetoric raises the risk premium and impacts the dollar. From the perspective of credit and liquidity cycle theory, Brazil is in a phase of severe monetary tightening, where global and domestic liquidity is scarce and risk appetite is depressed. When candidates avoid direct confrontation of economic proposals, they deprive the market of clear signals about future fiscal policy, which further restricts the flow of foreign capital into the country and forces local investors to seek shelter in highly liquid, low-risk assets, drying up credit for the productive sector.

The programmatic silence of the candidates prevents the fair pricing of Brazilian assets, as it hides the real fiscal intentions for the next mandate. While the commercial dollar shows a slight negative fluctuation of -0.42% in 30 days compared to the reference of R$ 5.224, the US currency remains consolidated above the psychological support of R$ 5.20, indicating that the recent relief was purely marginal. With the target Selic maintained at 14.00% per year and showing absolute stability of 0.0% in the last 30 days, it is evident that the Central Bank has no room to loosen financial conditions while political uncertainty prevents the anchoring of long-term inflation expectations.

Projecting the coming months, the short- and medium-term scenario requires redoubled caution. Over the next 30 days, the trend is for exchange rate volatility to remain around R$ 5.20, fueled by the absence of structured debates. In 90 days, if inflation measured by the IPCA continues to press the ceiling of the target (currently at 4.44%), the lack of a credible fiscal plan by the candidates could force the market to demand even higher future interest rates than the current 14.00% Selic. For a 180-day horizon, the persistence of this vacuum of concrete economic proposals could consolidate a flight of capital.