Brazil Risk Was Never That Low: 206 Points

The US’s Central Bank announcement yesterday that it would keep basic interests rates unchanged at 5.25% a year, sent shock waves and good tides to the Brazilian economy, which saw today the Brazil Risk sink to a record low: 206 points.

The Brazil Risk indicator measures the degree of distrust international investors have towards Brazil. Measured by JP Morgan bank the index retreated 4.17% today compared to the previous day.

That should be good news to Brazilian money borrowers since, at least in theory, the lower the risk index, the lower the interests charged to those Brazilians borrowing money overseas.  

For Brazil, low interest rates in the US are good news. It’s assumed that higher interest rates in America harm developing countries’s economy, since investors are always looking for the best return for their capital without high risks. 

The Fed decision should bring more money to the Brazilian stock market, according to Brazilian analysts. They also expect that now Brazil’s Central Bank will be buying more dollars to reinforce its coffers with the greenback and prevent an even bigger dollar devaluation.

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