Brasil Real Vc Dollar and Euro

[xchris]

After a short upturn, dollar and euro seem to go down again.

Now we are at 2,47 and 3,20 vc real. Euro was at 3,43 during the carnival, and junped to 3,65 couple of weeks after, but now seem to loose with no stop.

Any preview?

 

Ciao

CHRIS

[sf traveler]

While much smarter people than I have lost fortunes trying to predict exchange rates, I'm going to venture where angels fear to tread and make some predictions that most of you won't like. I believe that exchange rates were unduly depressed when Lula ran for office and Argentina was melting down and have now very gradually returned to a more economically reasonable rate. While both the US dollar and the euro have problems of their own, the Brazilian balance of payments is positive and hitting a new record every month. Also Brazilian interest rates are quite high, to try to fight inflation, and that also tends to support a currency. There is much more one could say about this, but my opinion is that we aren't going to see R$3.5 (or even 3)to the dollar for some time to come. Only time will tell if I'm right but my recommendation is get used to the new regime boys. SF Traveler

[Guest dreynsol]

Unfortunately, I think that the Real is on a target of 1.8 to the dollar, which is the level before the current president took office. He turned out to be much more fiscally conservative than some of his predecessors, with interest rates at around 19%. There is a projection that Brazil will become a member of OPEC by 2006, exporting more oil than it consumes.

 

Because of the distribution of wealth, there will still be garotos on the wrong side of the coin. But, personally, I think it will cost us more for that Brazilian experience – I hope I’m wrong.

 

Here is an excerpt surprisingly from a Brazilian senator, He is a PT senator for the Federal District and was Governor of the Federal District (1995-98) and Minister of Education (2003-04).

 

>>>

Something is wrong. Something is wrong with a country when you wake up and read in your morning paper the details of a slaughter of 30 persons, almost all of them young people, who were in that place merely by chance.

 

Something is wrong with a country in which indigenous children die from hunger, from the lack of attention, and, above all, from the greatest of the indecencies: indifference.

 

There is something wrong with a country that is commemorating the greatest GDP in its history, an elevated growth rate, but is not improving the social conditions of its people.

 

That is surpassing the mark of US$ 100 billion in exports but not distributing the results of this monetary influx to the 70 million Brazilians who are excluded.

 

There is something wrong with a country that has such a high fiscal burden and whose National Congress dedicates itself to debating the reduction of this burden without analyzing the other side of the federal budget: what to do with the money that the government has.

Something is wrong when there is no vote on a constitutional amendment making it obligatory for the state to offer childcare placement to our children. This is very wrong if we consider that this obligation should have been written into our constitution since its promulgation.

 

We instituted a minimum wage that should guarantee a life of dignity to all families; we considered the right to property untouchable, but we do not deal with children's right to attention and care, beginning in early childhood. And we still think that there is no money.

 

There is something very wrong when the governing class thinks that there is no money for the children. A politician incapable of caring for the children does not deserve to be in office.

 

It can be argued that there is no money for all the rest. But when an officeholder says that there is no money to take care of the children, there is something profoundly wrong.

<<<

 

Tchau,

 

- Drey

[trilingual]

Even at 2 reais to the dollar (or 3 to the euro) Brazil is still a bargain for travelers from the Northern Hemisphere. But it's kinda depressing nonetheless! :-(

 

So far the predictions in the papers haven't held up. They were predicting recently that the real would be back to around R$2,90 to the dollar by the end of the year, and maybe R$3,15 the following year. As SF Traveller pointed out, Brazil is running record trade surpluses and also large budget surpluses, and the economy is growing, so that causes the real to strengthen, as do the sky-high interest rates. However, exporters have been very nervous for some time that the stronger real will make their products uncompetitive abroad, and at less than R$2,50 to the dollar Brazil may be reaching that threshhold, at least for certain products and commodities. That will make the government start thinking about taking action, especially because there will be presidential elections in Brazil next year and the current govenment wants to be able to boast of booming exports during its campaign next year.

 

Inflation is pretty well under control in Brazil (although it's been affected by high oil prices) and there's enormous public pressure to begin lowering interest rates. When that happens the real should get cheaper again. In the short term, the government may get more aggressive about buying dollars to beef up its reserves to take advantage of the currently strong real. That will also tend to make the dollar stronger. But the fundamental problem is the out-of-control U.S. deficit spending. As long as the Bush administration insists on driving the U.S. over the fiscal cliff, the dollar will continue to be soft. Not that things in Europe are so well run, but they're not running ruinous and ever-mounting deficits the way the U.S. is, so in comparison the euro looks more appealing than the dollar. At the moment, Brazil's economy is being run more responsibly than the U.S. (with the exception of the interest rate situation) so that makes Brazil's currency more attractive to investors, too. But things are always subject to change.

 

In the meantime, to get a better rate visitors to Brazil may want to consider bringing cash dollars or euros and exchanging at the cambios (for the black market rate). As of today the "parallel" rate was considerably better in São Paulo than in Rio, but in either case you'll do better than at the ATMs. Of course, there is the added risk of having to travel and walk the streets with wads of cash, so you'll have to weigh that risk in your calculations of what you want to do to exchange money in Brazil.

[Big Daddy]

When using an ATM, remember that your bank may charge an additional fee. For example, Compass Bank (which I changed to after a bad experience with the fraud dept of Bank of America) has notified me that as of May 15th, they will charge a 1% fee on all cash withdrawals, and 2% on purchases. I will pull more than I normally would to avoid the fee, as I arrive on May 12th. I never use my VISA ATM card to buy anything (learned my lesson from Bank of America). I however have had no problem with my American Express.

[trilingual]

The free fall continues. Today the dollar closed at R$2,46! No end in sight, according to the papers, at least until Brazil lowers its interest rates and/or the U.S. and Europe increase theirs.

[Brall]

Despite what the Brazilian guys may think, I am not a rich American/German, so with the dollar dropping so low, I am packing my bags and heading home. I have enjoyed visiting Brazil for the past few years, but the visits are getting too expensive. By the time you add up the cost of the guy, the entry price to the sauna, the price of the room, and drinks/snacks at the sauna, one would have spent a lot of money for a 5 to 15 minute "roll in the hay"; not to mention the price of the airplane ticket and hotel. All things considered, I will come out cheaper staying at home and dealing with the Americans hustler (escorts, whatever). Brazil is fantastic, but now it is getting too expensive. Good luck to all of you rich guys (smile) who can hang in there.

[trilingual]

I'm not rich, either. But even if dollar falls to R$2 = US$1 Brazil would still be affordable.

 

When the exchange rate was R$3 = US$1 a R$50 "progama" at the saunas cost US$17. Currently (at R$2.46) it costs US$20. At R$2 = US$1 it would cost US$25. I don't know of any place in the U.S. you can have fun for a similar price.

 

The weakening dollar does have more impact on overall expenses if you're an American living in Brazil. When you're paying R$1500/mo. in rent, condo and property taxes (for example) the difference is much more noticeable. However, it would still be reasonable compared to what rent for a similar place costs in most big cities in the U.S.

 

The drop in the value of the dollar is painful for those of us who earn in dollars and spend in reais, but let's not exaggerate too much! Even if the real and dollar started trading at par (1 =1) programas at the saunas would still be much cheaper than in the U.S. Other things (like hotels and rent and restaurants) probably wouldn't be.

[xchris]

Your guys are right, about costs and expenses.

 

My only purpose was to imagine wheather is better to me to buy other apt in a hurry or wait the next recover of the euro.

 

I think that this is a risible problem, though, vs other bigger problems all over the wotld.

 

Have fun. Ciao

 

CHRIS

[Guest jairo]

>

>In the meantime, to get a better rate visitors to Brazil may

>want to consider bringing cash dollars or euros and exchanging

>at the cambios (for the black market rate).

 

Tri,

 

What exactly is the "black market rate"? If we go into a cambio, are there different rates?

 

Obrigado, Jairo

[trilingual]

The cambios exchange money at the black-market rate (euphemistically referred to in the newspapers and other places as the "parallel" rate). The cambios almost always offer a better rate than the official one you get at banks or ATMs. However, in the past few years the difference between the official and parallel rates has usually been just a few centavos, so from a practical and safety standpoint it wasn't worth bringing cash dollars and exchanging them at a cambio, unless you were dealing in very large sums (like if you're buying an apartment).

 

With the recent fluctuations in exchange rates, there can now be a significant difference between the official and parallel rates, which can make it worth your while to bring cash and exchange it at a cambio in Brazil. In Rio these days you can usually get about 10 centavos more than the official rate. In São Paulo you can get considerably more (maybe 25 centavos more). That's probably because Rio, as a major international tourist destination, tends to be awash in cash dollars. São Paulo attracts fewer tourists, so there are fewer cash dollars floating around, making them scarcer and more valuable.

 

You can find the quotations for the previous day's exchange rates in the financial section of the major newspapers. There should be a box or section for "cámbio" or "dolar" with the official and parallel rates.

[xchris]

9 de maio de 2005

ECONOMIA

Dólar fecha em queda pela 7ª vez seguida e crava novo piso: R$ 2,45.

 

It looks that the slow down will continue.

 

Pela sétima vez consecutiva as vendas superaram as compras e o dólar fechou em queda. A moeda americana caiu 0,48% e cravou novo piso no ano, valendo R$ 2,448 na compra e R$ 2,450 na venda. É o menor valor do dólar desde 8 de maio de 2002.

 

Segundo o Boletim Focus, do Banco Central, os analistas dos bancos elevaram, em média de 6,28% para 6,30% a previsão para o IPCA deste ano. O BC persegue uma inflação de no máximo 5,1%. Com o aumento das projeções, crescem as chances de novos aumentos de juros. Com isso, o Brasil continuará um destino atrativo para o capital especulativo e o dólar deve continuar a ceder.

 

They say that the dollar (and Euro) must continue to fall. This could give an idea of what the financial policy is operating and especting for the future.

 

CHRIS

[trilingual]

If the the Brazilian Banco Central is foolish enough to CONTINUE jacking up the already astronomical interest rates the dollar will continue to fall in Brazil. But many analysts think that there's room to start lowering them without triggering galloping inflation. And the government can't afford to go into an election year with a collapse of exports, a recession, and higher unemployment, all of which will be consequences of higher interest rates and a plunging dollar. I've been wrong before, but I somehow don't think the ruling party wants to commit electoral suicide next year! On the other hand, the government has made a few other BIG political mistakes this year, so I guess there's no guarantee they'll do the smart thing!

 

Independently, if interest rates in the U.S. continue to rise, the dollar will strengthen because the U.S. will become a more attractive place for foreign investors to earn money! So there are a number of factors at work, and we're just going to have to see how it plays out.

[ohgwm226]

Here is the latest news about Brazil trying to lower the Real value vs Dollar:

 

Brazil's central bank to sell currency swaps Tues

Mon Nov 21, 2005 04:24 PM ET

SAO PAULO, Brazil, Nov 21 (Reuters) - Brazil's central bank on Monday said it will sell currency swaps on Tuesday that curb the strength of the country's currency, the real (BRBY: Quote, Profile, Research) , which is trading near its highest level in 4.5 years.

 

The bank will sell up to 10,500 swap contracts after having sold 8,400 contracts worth $404 million on Friday, when it held its first swap sale since March.

 

The swaps allow investors to buy exposure to Brazil's lofty interest rate of 19 percent without having to buy reais, and thus cut demand for the local currency.

 

At the same time, the swaps retire outstanding dollar-linked liabilities that rating agencies have encouraged the government to pay down.

 

The swap sales are complementing frequent interventions by the central bank in the spot currency market. Since last month, the bank has bought about $5 billion to build up foreign reserves, economists estimate. The purchases also push the real towards weaker levels to keep exports competitive.