Brazilian Government Allows Real to Depreciate

The Brazilian real fluctuated today as Brazil’s government indicated that it is not going to intervene in the exchanged markets in order to support the currency. The willingness of the government to allow the currency to weaken harmed the real, but it recovered later.
Finance Minister Guido Mantega said that the stronger dollar is good for the nation’s economy and the government is not going to support the domestic currency:

The government has never set parameters for the dollar and will not do so. The dollar floats, and therefore will fluctuate according to the market.

The European crisis and the slowdown in China are indeed weakening the real and strengthening the dollar. Those same factors are slashing prices for commodities, though, reducing growth of food prices, caused by the weaker real. Nevertheless, analysts boosted their forecast for Brazil’s inflation in 2012 from 5.12 percent to 5.22 percent.
USD/BRL traded flat at 1.9966 as of 23:12 GMT today. The daily minimum was 1.9966, while the maximum was 1.9973.

If you have any questions, comments or opinions regarding the Brazilian Real,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published.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