Big Surplus Keeps Dollar Down in Brazil

The Central Bank’s weekly survey of market analysts and financial institutions (known as the Focus Bulletin) found that the forecast for the 2006 increase in the Broad Consumer Price Index (Àndice Nacional de Preços ao Consumidor Amplo) (IPCA) is 4.66%, which is slightly higher than the government’s target of 4.50%.

The survey also found that the market forecast for the 2007 IPCA increase rose from 4.05% to 4.20%.

Brazilian exports have gotten off to a very strong start this year. The surplus for the year (up to February 10) has already reached US$ 3.870 billion, up 19.59%, compared to the same period in 2005.

So far, total exports for the year are US$ 12.939 billion and imports US$ 9.069 billion. Both up: 24.1% and 26.2%, respectively.

For the week ending February 10, exports totaled US$ 2.375 billion and imports US$ 1.494, for a surplus of US$ 881 million.

The Central Bank’s weekly market survey, the Focus Bulletin, has found that market analysts and financial institutions believe in a further devaluation of the dollar against the real – Brazil’s currency.

Last week the market forecast was for the dollar to close out 2006 at 2.35 reais. This week it fell to 2.30 reais. The forecast for 2007 also dropped: down from 2.50 to 2.40 reais.

The principal reason for the dollar devaluation is the surge in Brazil’s foreign trade surplus. Last year it reached US$ 44.7 billion. And market forecasts are for it to close at around US$ 40 billion again in 2006.

At the same time, the market forecast for the 2006 current account surplus rose from US$ 8 billion to US$ 9 billion. And for 2007, the forecast for the current account surplus rose from US$ 4.25 billion to US$ 5.25 billion.

Market forecasts for domestic economic performance are less upbeat. GDP growth for 2006 is expected to close out the year at 3.50%, with a sluggish 4% increase in industrial sector output. The forecast for 2007 is a GDP increase of 4.13%, down from last week’s forecast of 4.25%.

Forecasts for the 2006 net debt/GDP ratio went from 50.45% to 50.50%. And for the 2007 net debt/GDP ratio it went from 48.70% to 48.90%.

With regard to interest rates, the forecast for the benchmark Selic is for it to close out 2006 at 15%, and drop to 13% by the end of 2007.

ABr

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Look, Ma, Looma!

"When she giftwraps herself in these tiny dresses—the red one with a high slit ...

Bioenergy: Brazil Is Already There Where the World Is Going to

Under the pressure of soaring oil prices and growing environmental constraints, momentum is gathering ...

Rice and Lula Discuss Brazil-US Ethanol Joint Efforts

US Secretary of State, Condoleezza Rice, arrived in Brazil on Thursday, March 13, for ...

Opposition Gains Don’t Deter Brazilian Bulls

Brazilian and Latin American shares rose, ahead of this week’s U.S. presidential election. Stocks ...

Daguerreotype and the Birth of Photography in Brazil

Louis-Jacques Mandé Daguerre (1787-1851) was a French artist from whose name was coined the ...

US dollar falling face the Brazilian real

Dollar in Brazil Falls to Almost 7-Year Low

Foreign investments in Brazilian stocks and bonds keep making Brazil's currency, the real, stronger ...

Brazil Opens World Social Forum’s 10th Edition. All Protestors Are Welcome

Ten years after its creation the World Social Forum, a leftist alternative to the ...

Brazil wants to install condom machines in schools

Condom Machines Won’t Solve Brazil’s Sex and Pregnancy Woes

Once again Brazil is offering a simplistic solution for a serious problem plaguing young ...

Chilean Hooligans Have 72 Hours to Leave Brazil or Be Deported

The invasion of the press center of the Maracanã stadium, in Rio, Brazil, moments ...