SÃO PAULO, 8 Dec (Reuters) - After the surge of the previous session, the dollar fluctuated below R$5.40 this Monday, but the "Flávio Bolsonaro risk" reduced the room for adjustments and caused the U.S. currency to close with a slight drop.
The spot dollar closed the session with a slight decrease of 0.23%, at R$5.4220. For the year, the currency has accumulated losses of 12.25%.
At 5:03 PM, the future dollar contract for January -- currently the most liquid in Brazil -- fell 0.31% on B3, at R$5.4505.
On Friday, the spot dollar closed up 2.34%, at R$5.4346, following the news that former president Jair Bolsonaro chose his son Flávio to run for the presidency.
The advance was a consequence of the assessment that, if Flávio is indeed a candidate, the market favorite -- São Paulo Governor Tarcísio de Freitas (Republicans) -- will be out of the race. In addition, a scenario without Tarcísio's candidacy is viewed as favorable for the re-election of President Luiz Inácio Lula da Silva.
On Sunday, however, Flávio Bolsonaro said there is a possibility of not going all the way in the electoral race, but that his withdrawal would come at a cost. It is speculated that the cost could be related to the family's interest in seeking approval for amnesty for those involved in the coup acts of January 8, 2023.
In this scenario, the spot dollar marked the intraday minimum quote of R$5.3869 (-0.88%) at 10:53 AM, with investors adjusting positions in light of the prospect of Flávio Bolsonaro's withdrawal. However, as no news in this regard emerged, investors continued to show caution regarding the political scenario.
At 12:33 PM, the spot dollar marked the maximum quote of R$5.4690 (+0.63%), before returning to negative territory by the close -- but far from offsetting the strong rise of Friday.
"Flávio Bolsonaro's candidacy added a lot of noise," said Alison Correia, investment analyst and co-founder of Dom Investimentos, in a written comment.
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