EXCHANGE RATE UPDATE

[trilingual]

Yesterday both the Brazilian real and Argentine peso were valued at $3.07 to the dollar. This represents a fair weakening of both currencies, which were trading at around $2.85 just recently. For some time, the Argentine peso was marginally stronger than the real, usually with about a 5 to 10 centavo difference in favor of the peso. Now the two currencies are at par.

 

This means that both Brazil and Argentina are cheaper for visitors with dollars and euros. Argentina in some ways was already cheaper than Brazil (taxis and meals, for instance) so with the currencies at par that means Argentina is even more affordable now. (And that also explains why Argentina is crawling with Brazilian tourists!) So help our local economies and bring your dollars and euros! You'll get more than your money's worth! :9

 

In Brazil, at least, this time of year (the low tourist season) has traditionally seen more favorable exchange rates with the dollar. Usually (but not always) the real gets stronger after Christmas, when the high season gets in full swing and the country is awash with dollars and euros from foreign visitors here between New Year's and Carnival. It'll still be cheap, but not as cheap as it is right now.

[Guest alanm]

That is good news for tourists, but what does it mean for the long term stability of the two countries. Isn't Argentina in big trouble economically already? In other words, should we really be celebrating the currency situation in Argentina and Brazil? Both countries have

turned to right wing dictorships in the recent past when political and economic stability was rampant. Sorry, needed to rant!

[trilingual]

In both countries the current rate of exchange is within the government's targeted value for the currency. Neither currency has plummeted; they've just weakened. Part of this is due to the current increase in international oil prices and part due to local political uncertainties. Economically, both countries are doing pretty well, compared to where they've been in the recent path. Both the Argentine and Brazilian economies are finally growing. The cheap real and peso makes Argentine and Brazilian exports very attractive abroad, and the export industries are booming, with record trade surpluses being racked up by both countries. The favorable exchange rate also makes Brazil and Argentina extremely attractive to tourists. Buenos Aires is flooded with foreign visitors who are leaving behind hundreds of millions of dollars/euros to the benefit of the local economy. Brazil is also benefitting, with Rio tourism in particular doing better in the past year or so than it has done in years! Neither country is showing any serious signs of political instability. To the contrary, both finally seem to have turned the corner, and future prospects are pretty good barring any more world-wide economic shocks that could damage the still somewhat-fragile recoveries in both countries.