Dollar Reaches Record Lows in Brazil While Brazilians Spend 44% More in Overseas Trips

    Brazil's credit cards

    Brazil's credit cards For the 6th straight day the American dollar continued on Tuesday its free fall in Brazil taking the Brazilian currency, the real, to new heights not seen since 1999.  The dollar inflow in the country reached U.S. US$ 50 billion in a year, informed the Central Bank.

    Meanwhile, Brazilians abroad spent US$ 10 billion, 44% more in the first half of the year when compared to 2010. The Central Banks took aggressive action to prevent the dollar from falling even more than it did.

    Brazil’s Real soared Monday to its highest level against the US dollar since 1999. The dollar was buying 1.53 Real at midday on financial markets, representing a 0.9% increase from Friday. The dollar closed  at 1.54 Real but below the 1.55 of twelve years ago.

    The latest jump came despite efforts by the Brazilian government to stem the rise of the Real, which can hurt the economy by making exports from the emerging economy more expensive.

    Brazil’s central bank has spent some US$ 36 billion dollars intervening in the markets in an effort to slow the rise of the real in the first six months of the year. The administration of President Dilma Rousseff has also slapped taxes on financial transactions to discourage speculative investments from abroad.

    From São Paulo at a business leaders event Finance minister Guido Mantega said on Monday the Brazilian government was ready to take any measures necessary to fight excessive currency gains and blamed the US and China monetary policies for much of the trouble as well as uncertainty in the Euro zone.

    “The government is still seriously watching the currency and we’re always ready to take measures that will stop excessive gains in the Brazilian currency” Mantega said.

    Just hours after Mantega spoke, the central bank called a dollar forward auction to try to contain the real rally, a tool that policymakers have not used since April.

    The real gains have worried Brazilian exporters, who find their produce more expensive, and so harder to sell, abroad. The Brazilian government has promised industry a fiscal package to help retain competitiveness which should be announced next week.

    But the stronger real also helps contain consumer prices by boosting cheap imports. With Brazil’s 12-month inflation rate above target for more than three months now, some analysts have speculated that the government could tolerate a stronger real as a means to fight inflation.

    However Mantega denies such speculation and blames the United States ultra-loose money policy for the real gains and China for refusing to let the Yuan float freely.

    “This problem will only get better when there’s a recovery in the (US) economy” he added. Mantega also insisted with his argument that there is no ‘overheating’ in the Brazilian economy.

    “The problem isn’t overheating in the Brazilian economy: it’s under-heating in advanced economies” underlined the Brazilian minister.

    With the currency ever so strong against the US dollar Brazilians are traveling overseas and spending as never before, according to the latest figures from the Central Bank.
     
    “Spending overseas in June and in the first half of 2011 is the highest ever since the Central Bank begun taking records in 1947”, said Tulio Maciel, head of the Central bank Economic Department.

    In July the tendency is even steeper given the winter holidays in Brazil. So far this month, Brazilians have spent overseas 1.32 billion dollars. However the overall sum is greater since the Central bank account refers to net values and thus 338 million dollars spent by incoming tourists was subtracted from 1.7 billion.

    Maciel also pointed out that the use of credit cards by Brazilians is falling following the tax increase on financial operations imposed last April.

    That month spending on credit card was 59% above the same month in 2010, but in May the increase was down to 33.9% and in June, down to 23.4%.

    Similarly the percentage of travel expenses paid with credit cards is down from 60.1% in April to 54.7% in May and 54.2% in June.

    With the strong real many Brazilians are preferring to travel overseas. Furthermore some of the travel packages to Europe and the United States are cheaper than spending the same time in the country’s northeast where its summer all year.

    The dollar floats in the range of 1.50 to 1.55 Real, having appreciated 40% since the 2008/09 international recession.

    Mercopress

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    Ads

    You May Also Like

    Brazil's Petrobras workers

    Brazil’s Petrobras Workers Go on Strike and World’s Oil Prices Zoom Up

    As if oil prices weren't high enough with Middle East tensions, market speculation and ...

    A Brazilian’s Theory on Heart Disease Gets Some Respect in the US

    Considered fascinating by many physicians and scientists, the myogenic theory of myocardial infarction, developed ...

    Best-seller books, plays & movies

    PLAYS Alice que Delícia — Written by Antônio Bivar and directed by Nildo Parente. ...

    Petrobras oil development in Coari, in the Brazilian Amazon

    Brazil Goes Prospecting for Oil Inside the Amazon

    Environmentalists all over the globe are concerned that the Brazilian Amazon, one of the ...

    A Brazilian Furniture Hub Discovers Design and Ecology

    In operation for over 40 years, with 312 companies in nine cities and generating ...

    Bar Association Calls Brazil’s Presence in Haiti Cruelty Against People and Troops

    Organizations and social movements that participated in the World Social Forum in Venezuela last ...

    The Little Guys from Brazil Who Made Big in Furniture

    Training of the businessmen and investments in production and in design. These are the ...

    Brazilian president Dilma Rousseff

    Brazilian President Is Favorite of Voters, But She Could Lose in a Runoff

    The first poll conducted after the death of presidential candidate Eduardo Campos (PSB) shows ...