The COVID-19 outbreak in the United States has caused millions of people to lose their jobs and brought the economy to its knees but it has not dethroned the American dollar. On the contrary, the currency has risen in value this year, gaining six percent from its lowest point reached in early March, according to the US dollar index, which measures the greenback's value against a basket of other currencies.
Brazil’s economy minister blamed the Real’s slide to an all-time low on the coronavirus outbreak and said the currency could weaken to as much as 5 per dollar if he “messes up.” Paulo Guedes said the Real is weakening largely due to the economic impact of the epidemic, rather than a change in the country’s risk perception.
Brazil’s real posted a record low close against the dollar for a second straight day on Wednesday, after earlier sliding to within less than one centavo of its weakest-ever level as the weight of selling pressure built up on several fronts.
Brazil’s Real is sliding toward an all-time low against the U.S. dollar, but the central bank appears in no rush to intervene to slow or even reverse the fall. Despite the Real’s historical weakness, the market is functioning smoothly: depreciation, so far, has been fairly orderly, volatility is low, liquidity has not dried up, and the Real is not the only emerging market currency under pressure.
There are many factors that affect the value of currencies and influence the flow of foreign exchange, but few have a more significant impact than a trade war.
Argentina's peso surged on Tuesday, pumped up by Wall Street traders cheering President Mauricio Macri's capital controls that are aimed at protecting the beleaguered currency. The peso closed 5.39% higher at 55.98 per U.S. dollar, traders said, its strongest level in a week after a near-record low close on Friday.
Brazil’s Real weakened past 4.00 per dollar for the first time in three weeks on Monday as an escalation in the U.S.-China trade war sent emerging markets reeling and a weekly snapshot of domestic growth forecasts fell to a new 2019 low.
Argentina’s struggling currency hit a record low against the dollar on Thursday, weakening over 4% to close at 42.5 pesos per dollar, a challenge for President Mauricio Macri as he looks to right the economy ahead of elections in October.
The US dollar fell Tuesday yet again, making it the seventh straight time the peso manages to recover due to the government's “cash-drought” measures. But that did not change the fact that According to the International Monetary Fund’s latest report, Argentina will have the fifth highest inflation rate in the world, which is expected to reach 41.5 by the end of the year..
Argentina will pay for unforeseen increases in the cost of cooking gas following public outrage and opposition in Congress to stymie the plan which would have seen consumers paying increased gas prices in 24 installments from January 2019.