Brazil Exchange Rate


Brazil: Brazilian real plummets to 12-year low

August 7, 2015

The Brazilian real’s (BRL) downward spiral has continued in recent weeks, as the currency plunged to a 12-year low in August against the U.S. dollar. The downward trend that started in April 2014 has been fueled by an ongoing slew of poor economic data and growing uncertainty that the government will be unable to halt the economy’s decline. On 6 August, the real fell to 3.54 BRL per USD, which represented a 3.4% depreciation over the same day last month. The figure represented a 33.1% decline in value from the start of the year and a 55.5% decline in value from the same day of the previous year.

The sharp depreciation comes amid a deteriorating outlook for Brazil’s economy and increasing political uncertainty. While President Dilma Rousseff has been trying to right the economy’s sinking ship through balancing fiscal accounts and economic reforms, her approval ratings have fallen to an all-time low and she is facing rising hostility in Congress. On 6 August, Rousseff’s agenda was dealt a major blow when the lower house of Congress passed a bill to raise wages of some government workers. The bill could cost the government BRL 2.5 billion (USD 714 million) per year and is in direct opposition to Rousseff’s agenda.

LatinFocus Consensus Forecast panelists expect the real to end 2015 at 3.11 BRL per USD. In 2016, panelists believe the real will depreciate further to 3.23 BRL per USD

Author: Angela Bouzanis, Senior Economist

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Brazil Exchange Rate Chart

Brazil Exchange Rate August 2015

Note: BRL per USD (eop)
Source: Thompson Reuters and FocusEconomics Consensus Forecast.

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