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Dollar Sinks to 13-month Low Against Brazilian Real. US Currency Down 32%

US dollar and Brazil real currencies The real, Brazil's currency, rose to the strongest level in more than a year after a statement from the Group of Seven's leaders lacked support to stem the dollar's slide against major currencies, prompting investors to buy higher-yielding assets.

The real climbed 1.3% to 1.7598 per US dollar from 1.7820 on October 2. Earlier it touched 1.7594, the strongest since September 9, 2008. Monday's rise extended the real gain to 32% this year.

The G7 met at the end of a week in which policy makers from France to Canada signaled concern that a sliding dollar risks impeding their recoveries from the deepest global recession since World War II.

The US dollar has dropped 13% against a basket of seven currencies since early March.

"Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," G7 ministers and central bankers said in a statement after talks over the weekend in Istanbul.

As a result, on Monday, 22 of 26 emerging-market currencies gained against the dollar, led by a 2.2% rise in the South African rand.

The real extended gains after Brazil posted a weekly trade surplus of US$ 415 million in the period ended October 4, reversing two consecutive weeks of trade deficits, the Trade Ministry reported Monday.

Demand for higher-yielding currencies was also fueled after a report showed US service industries expanded in September for the first time in a year, as the emerging recovery spread from housing and factories to the broader economy.

The US Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90% of the US economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.

Brazil's heavy investment inflows were also bolstered by interest in Banco Santander's (STD) local stock offer, for which Monday was the last day to reserve shares.

Santander is planning to raise between 11.55 billion and 13.12 billion reais through its offer of shares in its Brazilian unit, making this one of the largest IPOs in the world this year.

With the return of international market liquidity, investors are once again attracted to Brazil's comparatively high real interest rates. The benchmark Selic rate stands at 8.75% per year, although analysts expect it to rise again over the next year. The official IPCA inflation rate was 4.36% through August.



  • Show Comments (5)

  • Bo

    And where is Krushev’s Russia now?

    Think about it.


    ASP….you’re right about the dollar, but I think we’re on the right track. FoxNews and all their idiotic listeners can try and derail Obama all they like…but he and his team have us going in the right direction.

    Back in Brazil.

  • Lloyd Cata

    American Sheep
    Many years I have told you about the coming decline of the dollar and now it has happened some seem surprised, but the best is yet to come. What will you buy from the US that you cannot buy elsewhere? Fighter jets, armored humvees, second-hand Iraq munitions?
    When the dollar falls to 1.5 then the US will export the inflation because they still have big hooks in your agri-sector. Pretty soon they will not be able to even feed themselves because the fruit is rotting in the field with no slave(immigrant) labor to pick. Their subsidies to their agri-sector now will strangle their farmers who will have to go on welfare and send the tractors to Guatemala for food. It is just sad, but the American people have no choice as the American police state expands to keep people from stealing food. Prisons is now the lucrative growth industry in America so don’t expect revolution anytime soon. The trick is that as they IMPORT more food, the price for everyone in the hemisphere will rise and so as I predicted many years, the Americans will EXPORT inflation so they can continue to eat their way out of their current obesity. ๐Ÿ˜ฎ ๐Ÿ˜‰ Capitalists are so predictable because they will do anything to fill their pockets. Even when it means the death of their own people, so you can figure how much value they have for others. Was it Khrushev who said they will sell the bullets to kill themselves? Anyway, that is just about right!

  • asp

    no one would like to be more wrong about that than me, bo…
    but, i read today in the new york times some hard news about the usa dollar, and, until the dollar firms up, im really worried…i guarnetee you it has a lot more at stake for me than whether my dollars are getting a good cambio rate…

    for 7 or 8 years the dollar has steadily dropped , except for the agter math reverse moment of the crisis, and, it will only mean bad things to come if americans dont understand the serousness of it…

  • bo

    Gloom and Doom…
    yeah asp, I`ve been here in the U.S. for over a month now, been all over the east coast, you should see the doom and gloom here! ๐Ÿ˜‰

    In the town I`m from unemployment hasn`t went over 4% and the construction and development is simply amazing. I`ll guarantee ya that no brazilian city the same size has EVER seen the development that has transpired here over the last several years and continuing to experience.

    Prognosticate your doom and gloom for the U.S.A. all ya want from your keyboard in southern brazil, the reality on the ground simply doesn`t support it.

  • asp

    thre is the sure sign the usa is on decline…
    if the usa doesnt get its money stabalised, it definitly is the sign of the decline…

    yet, many americans walk around with no realization that this is happening and it is the baromoter of future chaos

    all americans should be screaming from high hell to all the authorities to get the dollar strong again….if that is at all posible..

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