Brazil: Brazilian real falls to nearly an 11-year low amid domestic uncertainties
March 13, 2015
In March, 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 almost 11 year-low on 11 March and closed at 3.13 BRL per USD, which represented a 10.1% depreciation over the same day last month. On an annual basis, this represented a 32.2% decline in value from the same day of the previous year.
The sharp depreciation comes amid a deteriorating outlook for 2015. Brazil’s economy grew meagerly in Q3 2014 and more recent data suggest that the economy is still struggling. Low commodity prices are expected to weigh on export revenues going forward and the country is expected to record a large current account deficit. Moreover, Brazil’s government is facing rising hostility in Congress stemming from the ongoing Petrobras scandal. President Dilma Rousseff’s approval ratings have fallen to an all-time low and her fiscal austerity plan has provoked large-scale protests. In addition, the possibility that the Fed will raise interest rates in the near future has contributed to the real’s slide.