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Brazilian currency at its weakest against the US dollar since March 2003

Monday, August 3rd 2015 - 09:40 UTC
Full article 23 comments
On Friday the US dollar broke the 3,40 Reais barrier for the first time since 20 March 2003. The Brazilian currency in the month of July lost 10.2%. On Friday the US dollar broke the 3,40 Reais barrier for the first time since 20 March 2003. The Brazilian currency in the month of July lost 10.2%.
The strong reaction in the money exchange market followed the announcement by Rousseff that the 1.2% budget primary surplus was to be lowered to 0.15%. The strong reaction in the money exchange market followed the announcement by Rousseff that the 1.2% budget primary surplus was to be lowered to 0.15%.

The Brazilian currency Real lost 1% at the end of trading on Friday and begins this week at 3.42 Reais to the US dollar, the lowest in twelve years, because of the political and economic uncertainties surrounding Latin America's largest economy.

 On Friday the US dollar broke the 3,40 Reais barrier for the first time since 20 March 2003. In the week ended last Friday the greenback climbed 2.3% against the Brazilian currency and in the month of July 10.2%.

The strong reaction in the money exchange market followed the announcement by the administration of President Dilma Rousseff that the original budget primary surplus of 1.2% was to be lowered to 0.15%.

At mid last week the Brazilian central bank raised the Selic reference interest rate for the sixth time running to 14.25%, arguing battling inflation was the major challenge.

The catch-all coalition that supports Rousseff is reluctant to support the drastic measures needed to straighten the budget and bring the economy back on its rails, fearing the deepening recession could be too damaging politically.

Meanwhile the Bovespa index, from the main stock exchange in Sao Paulo ended the week at 50.658 points a seven day advance of 2.87%, but overall during July the market lost 4.7%.

The vulnerable situation of Brazil, not only financial, but even more important politically, is already having an impact on its main Mercosur partners and the rest of the continent as it is the largest economy in Latin American.

The situation is particularly stressing for Argentina which has become heavily dependent on Brazil for its manufactured exports, and for Uruguay and Paraguay, whose main trade partner is precisely Brazil.

Categories: Economy, Brazil.

Top Comments

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  • Brasileiro

    Another big lie of Western terrorists. In 2003 the dollar was quoted at R $ 3.50. After 12 years the dollar remains the same value? So you want to fool us?

    Twelve years ago an aluminum can for beer cost R$ 0.60 and today that same beer costs R$ 1.50 (skol).

    At this price difference we usually call inflation. For the dollar was the same price 12 years ago would require the US inflation in that period was the same inflation in Brazil. But it was not!

    Brazilian inflation was much higher during this period. According to calculations from the IMF and World Bank economists (for this they serve) so that the dollar had the same value 2003 should be quoted at R $ 6.47. That is almost double what it is today.

    Aug 03rd, 2015 - 11:26 am 0
  • yankeeboy

    You're not very good at math.

    Anyhoo, down down down she goes. Where she stops nobody knows.
    Soon enough the reserves will have to be used to support the BReal.

    Glug glug glug.

    Watch Venezuela to see your future.

    Aug 03rd, 2015 - 11:34 am 0
  • Brasileiro

    The correct comparison should be made between the real with the yuan or ruble. Dollar is losing importance in BRICS trade much faster than I imagined.

    What your companies and investors will make 5 quadrillion dollars that run the world we have no interest in knowing.

    Aug 03rd, 2015 - 11:43 am 0
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