• Categories
  • Archives

Dollar in Brazil Falls to Almost 7-Year Low

US dollar falling face the Brazilian real

US dollar falling face the Brazilian real Foreign investments in Brazilian stocks and bonds keep making Brazil's currency, the real, stronger while the dollar continues to fall. This Thursday, May 31, the American currency fell to its lowest value in over six years.

The dollar retreated 0,82% closing at  1,926 reais the best show for the real since November 2000. In May alone, the US dollar fell 5.4% in relation to the Brazilian currency. The decline for 2007 has been 9.8%.

Brazilian Finance Minister, Guido Mantega, gave journalists his own explanation for the dollar decline. According to him, among the contributing factors to the fall are interest by foreigners in Brazil and funds received by the multinational steel company Arcelor Mittal to pay dividends and stockholders. The company's press office wouldn't confirm, however, the information that they got a dollar infusion.

Financial analysts say that a big chunk of the fresh dollars coming into Brazil is the result of foreign investor drawn by the country's high interest rates (12.5% for the Selic, the nation's benchmark interest rate) as well as Brazil's favorable economic scenario. The risk Brazil as calculated by JP Morgan Chase Bank is at 142 points on a down trend.

As Mário Paiva, an exchange rate analyst for brokerage house Liquidez, explains, the purchase of dollars by Brazil's Central Bank (BC) is not enough to contain the excess of the American currency in the market: "It has become a snowball. The more the BC reinforces its reserves, the more the country gets closer to investment grade and more the Brazil risk falls and the dollar flow increases."
 
It's expected that the low dollar will convince Brazil's Monetary Policy Committee (Copom) to reduce the Brazilian basic interest rate by 0.5% to 12% when they meet next week, on June 5 and 6. They might cut another 0.5% in their July 17 and 18 meeting.

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Your email address will not be published.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

Brazil Confident Its Stem-Cell Treatment Will Save 200,000 Lives in Three Years

In what is described as the world’s biggest experiment in the use of stem-cell ...

Central Bank of Brazil Sees Bigger Offer of Credit in the Country

Brazil's Central Bank registered growth in credit operations in all Brazilian regions in the ...

Killers of Brazilian Journalist Who Exposed Child Prostitution Get 18 Years of Jail

A Brazilian people’s jury, after two days of trial, declared three military policemen and ...

Brazilian Machinery Exports Grow 39% Resulting in Surplus

In spite of the appreciation of the Brazilian real in relation to the American ...

Brazil Starts Campaign Against Sex Slavery

Women are the chief targets of a campaign launched today by the Brazilian federal ...

Brazilian Black Entrepreneurs to Get a Boost from Government

Brazil’s Special Secretariat of Policies for the Promotion of Racial Equality (Seppir) and the ...

Brazilian Amazon Natural Products Win Arab Women Hearts and Bodies

Arab women have a new Brazilian brand of hair products made from Amazon fruit ...

A Brazilian Ant With a Christian Message for the Whole World

Smilingüido is an ant that lives with his friends in the anthill of the ...

Brazilian Senate Starts Enquiry on Foreign Ownership of Amazon

The Brazilian Agriculture and Agrarian Reform Senate Commission seems more dedicated than ever to ...

Brazil Senate Opens Hearings on Sustainable Development in the Amazon

The sustainable development plan for the Amazon region, in Brazil, which has been in ...