Brazil Sounds Alarm: If Dollar Keeps Falling We’re Ruined

US dollar Guido Mantega, the Minister of Economy of Brazil warned this Tuesday, August 5, that the sustained appreciation of the local currency, the real, against the US dollar has reached "a limit" and if the real continues to advance, "it could ruin our external accounts."

"If the Real keeps advancing on the US dollar, we're lost," said minister Mantega during a seminar on economic development sponsored by the Getúlio Vargas foundation in the city of Sao Paulo.

On Monday in Brazilian money markets the US dollar closed trading at 1.56 reais, which represented a 0.19% appreciation over last Friday. So far this year the Brazilian currency has advanced almost 10% against the US dollar.

"We expect the real to stop advancing. It must move towards a more stable and desirable level. We're on the limit and if it continues, our external accounts will be ruined," said Mantega.

Nevertheless he argued that the sustained appreciation of the real against the US dollar, pushed by several years of record exports "have helped to reduce inflationary pressures."

Last week, Brazilian President, Luiz Inácio Lula da Silva, announced a package of US$ 9 billion in subsidized financing, 7% annually, to help those manufacturing sectors which have suffered most because of the sustained depreciation of the American currency.

When Lula took office in January 2003 the US dollar was selling at 3.90 reais. Since then it has strengthened, particularly in the last four years, to the range of 1.60 reais.

Although there was some speculation when Lula first took office given his socialist and union leader background, he surprised most analysts with a most orthodox approach towards economics and particularly inflation which have been behind the performance of the Brazilian currency.




You May Also Like

Brazilian first astronaut aboard the Soyuz space capsule

Brazil’s First Astronaut Is in Orbit

Brazil’s first astronaut, Air Force Lt. Col. Márcio Pontes, and two other astronauts, an ...

Back in Africa

Closing my eyes I let the sounds and smells drift over me. The colorful ...

Arlindo Chinaglia, the new Speaker of the House in Brazil

Brazil’s Lula Faces Arm-Wrestling Contest with New Congress

The bewildering way in which Brazilian politics work was evident during the election for ...

Brazilian Indians Say Only Property Rights Will Make Them Feel Secure

The nutritional conditions of Brazil’s indigenous peoples were discussed Wednesday, June 29, at a ...

Brazil’s Açaí­ Berry Shown to Kill Cancer Cells in Florida University Study

A Brazilian berry popular in health food contains antioxidants that destroyed cultured human cancer ...

Brazil Can’t Compete on Cost or Gumption with China

So as to reach Arab consumers, most of the Brazilian companies face a challenge: ...

Brazil’s Gol Ranks Number One in Competitiveness

Brazilian Airlines Gol was named the most competitive airline of Latin America, according to ...

For Brazil Justice Caving In to FIFA’s Demands Means to Issue a Banana Republic Certificate

Brazil’s Supreme Court (STF) is against the proposals made by Soccer’s International Federation, FIFA, ...


Are they serious?In your March edition in the “Rapidinhas” section you listed a short ...

Beija Flor Wins Brazil’s Carnaval with US$ 4 Million Extravaganza

Brazil's Carnaval has a winner. For the second time in a row and the ...