With US$ 100 Billion in Reserves Brazil Says It Got Turbulence Vaccine

Brazil has its biggest dollar reserve ever: over US$ 100 billion Brazil's foreign trade reserves have exceeded the US$ 100 billion barrier for the first time in history. The Brazilian Central Bank (Banco Central, BC) disclosed yesterday, February 28, that foreign currency reserves – a kind of savings account that the country has for possible economic shocks – reached US$ 100.3 billion on Tuesday, February 27.

Brazilian Finance Minister Guido Mantega commemorated the fact stating that it "makes the country more resistant to the foreign turbulence that occasionally materializes."

And Mantega recalled that the financial market is nowadays "powerful and boosted", and that Brazil has large reserves to be able to face the situation if there is a large outflow of investment.

"With the reserves, we will be vaccinated against international turbulence," he guaranteed.

International reserves are composed of dollars entering the country due to exports and to financial investment and also due to purchases of the dollars made by the BC.

To purchase the dollars, the BC sells treasury bonds corrected by the Brazilian benchmark interest rate, the Selic, currently at 13%.

When the organization invests the dollars abroad, the remuneration is approximately 5%. The cost to the country of the purchase in dollars is 8%, and therefore analysts criticize the reserve replenishing policy that the BC put in place in 2004.

Mantega stated that it is due to the security that Brazil is immune to turbulence that countries now loan money to the country at lower interest rates. "The security we currently have that turbulence does not affect us is worth gold."



  • Show Comments (1)

  • ch.c.

    Dont be so sure Mantega !
    In April 1998 your foreign currency reserves stood at Us$ 84 billion !
    At that time your economy was smaller.

    And what happened next ?
    – Right then the collapse started :
    A) You stopped pegging the Reais to the US$
    B) Your devaluation ended in 2002 when your curency went as low to nearly 4 Reais per US$ and is by now around 2.10

    And even today when Brazilian caress their own navel because they finally have a strong currency, sorry but that is a short term view only.

    The Real is still HALF of what it was a decade ago against the US$ !!!!!!
    The Real today is worth 20 % of what it was worth before you pegged your currency to the US$ at the end of 1994 !

    A few decades ago every poor brazilian was multi millionaire….in your monkey currency !!!!
    So much that you cut 3 zeroes 3 times in 2 decades….only, plus you divided it by a factor of 2.75 when you did the peg in 1994, and today it is still 50 % of what it was when you pegged it !!!!!

    Therefore 1’000’000’000 (Yesss you read well 1 billion) of your 1985 currency IS ACTUALLY WORTH LESS THAN 0,30 REAIS or 0,15 US$ !!!!!! incredible but true !

    1986 three zeros are dropped and the cruzeiro becomes the cruzado.
    1989 three more zeros are dropped and the cruzado becomes the cruzado novo.
    1990 the cruzado novo is renamed the cruzeiro with no change in value.
    1993 three zeros are dropped from the cruzeiro which becomes known as the cruzeiro real.
    1994 the cruzero real is replaced by the real, worth 2.75 old cruzeiros reais.
    2007 the Real is still worth 50 % of when it was issued in 1994 !!!!!!

    But worse yet if you use a longer time frame because :
    1942 the cruzeiro becomes the new currency, replacing the old reis or mil reis.
    1967 three zeros are dropped and the cruzeiro becomes the cruzeiro novo.
    1970 the cruzeiro novo is renamed simply cruzeiro.

    Meaning effectIvely that you would need 1 MILLION times (yesss a multiplication) 1 BILLION OF YOUR 1942 CURRENCY TO GET 0,38 Reais of 2007

    Or to put the zeroes in places :
    2’750’000’000’000’000 of your 1941 currency became….1 Reais in 2007 !!!!!

    Sadly for you there is not 1 single zero added by mistake !

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