Brazil: Brazilian real falls to an over 10-year low amid domestic uncertainties
February 12, 2015
In February, the Brazilian real (BRL) continued the downward trend that started in April 2014, falling sharply against the U.S. dollar. The real fell to an over 10 year-low and closed at 2.87 BRL per USD on 11 February, which represented a 7.0% depreciation over the same day of the previous month and a 19.5% depreciation over the same day of 2014. The sharp depreciation comes amid weak economic data for 2014 and a deteriorating outlook for 2015. Earlier that day, the Brazilian Institute of Geography and Statistics (IBGE) released new economic data which showed that retail sales fell by the largest amount since the series began in December. Looking forward, the outlook for the year ahead remains bleak as low commodity prices are expected to weigh on export revenues and the country is experiencing a severe drought in agricultural areas.
The Central Bank has been intervening regularly in the foreign exchange market to support the real since May 2013. On 11 February, the Central Bank sold USD 98 million in currency swaps to limit the currency’s slide. The Bank will continue to offer currency swaps until at least 31 March.