Brazil Betting on Dollar Falling and GDP Rising

The exchange rate in Brazil this year is not expected to exceed 2.93 reais per US dollar at the end of December, accordng to the market analysts consulted last week by the Brazilian Central Bank (BC).

Last week’s issue of the Focus Bulletin, which is based on the BC’s weekly survey of financial institutions and market analysts and released every Monday, indicated a probable exchange rate of 2.95 reais for year-end 2004 and an anticipated increase to R$ 3.10 in 2005.


As a result of the calm on the international market, with the dollar quoted at 2.82 reais last Friday, November 5 – the lowest level since February of this year – and the gradual return of normalcy to the world oil market, the analysts continue to expect the government’s benchmark interest rate (Selic) to end the year at 17.50% [it is currently set at 16.75%] and see no short-term reasons for the exchange rate to move higher.


Another powerful motive for this, in their opinion, lies in the growth of Brazilian exports, which they expect will contribute to a record US$ 33 billion trade surplus this year, as against US$ 27.30 billion next year.


This factor also exerts a decisive influence on the foreign current accounts surplus, which they expect to reach US$ 10.20 billion this year and US$ 3.61 billion in 2005.


These numbers, together with the prospect of a 7.30% growth in industrial production (4.23% in 2005), led them to raise their projection for this year’s growth in the Gross Domestic Product (GDP) from 4.56% to 4.58% and maintain their prognosis of 3.50% for 2005.


This increase in the GDP contributes to a slight reduction in the ratio between net government debt and the total of wealth produced in the country (GDP).


This ratio, which the market estimated last week would end the year at 55%, was lowered to 54.85% for this year and 54% in 2005.


Agência Brasil
Translator: David Silberstein

Tags:

You May Also Like

Blue Blood

Due to his self-confidence the Fila Brasileiro shows a calm disposition as long as ...

Bolivia Nationalizes Gas and Gets What It Wanted from Brazil

Bolivian President Evo Morales completed his ambitious oil and gas nationalization plan early Sunday, ...

Dubai’s Default Doesn’t Worry Brazil Who Says It’s Loaded with Reserves

The president of Brazil's Central Bank (BC), Henrique Meirelles, said this Friday, November 27, ...

Lula Is No Friend of Ours Say Brazilian Indians

Around 200 indigenous leaders from 16 peoples from all of Brazil met September 15 ...

Rio Chooses 7-year Old as Carnaval Queen and World Gasps in Disbelief

Queen of the drum section is an important role in Rio’s Carnaval parade. It’s ...

Brazil Breaks Another Gang Smuggling Women and Children to the US

The Brazilian Federal Police have announced arrests of at least three people in the ...

US Buys 26% of Brazil’s Shoes. Exports Are Also 26% Down, However

In the first six months of 2009, Brazil exported 65.8 million pairs of shoes. ...

Brazil Market Gets Back on Its Feet with a Roaring 15% Gain

After seven consecutive days of losses, which totaled more than 20%, the Bovespa, Brazil's ...

Brazil Discusses Judicial Reform in London

The Brazilian Minister of Justice, Márcio Thomaz Bastos, discussed Brazilian judicial reform with Lord ...

Brazil Ready to Pardon Debts As Long As Someone Else Pays

Five Latin American countries seek to have their debts with the Interamerican Development Bank ...