MercoPress. South Atlantic News Agency

Brazil's currency at its weakest since September 2004...and sliding

Brazil’s economy is expected to shrink this year, and may have contracted last year as well, while the trade deficit is ballooning

The Brazilian Real reached on Tuesday its weakest level against the dollar in more than 10 years, amid concern the country’s political and economic situation is growing worse.

 The Real ended trading at 2.928 to the dollar, the weakest level since late 2004. The real closed at 2.8889 to the dollar Monday. So far since 30 January the Real has lost 11% and 9,67% in the last twelve months.

Brazil’s economy is expected to shrink this year, and may have contracted last year as well, while the trade deficit is ballooning. At the same time, differences appear to be surfacing between President Dilma Rousseff, who was re-elected in October, and her new finance minister Joaquim Levy.

Mr. Levy was given the job to try to get the country’s finances in order and to regain credibility in financial markets, and last Friday he criticized one of the tax-cutting measures implemented by his immediate predecessor, Guido Mantega. The following day Ms. Rousseff defended the measure, and called Mr. Levy’s comments “unfortunate.”

Political tensions in the country are also rising as investigation continues into alleged corruption at state-controlled oil company Petrobras. Judicial officials could name politicians implicated in the scandal as early as this week.

The most recent weekly survey of economists by Brazil’s central bank showed a median forecast for a contraction of 0.58% for gross domestic product in 2015, the ninth consecutive week economists’ predictions got worse.

On Monday, the trade ministry said the country had a trade deficit of 2.8 billion in February, the worst result for the month since 1980. The 12-month result is now a deficit of 3.8 billion, compared with a 1.4 billion surplus in the same period ended in February 2014.