As predicted,the Brazilian Real went through the 2.00 US$ psychological barrier today.
Yesterday the commercial balance of Brazil for May was announced: again a big surplus, this time of 2,6 billion US$. Projections for 2009 vary now between 25-30 billion US$ trade surplus.
The Brazilian Central bank is buying dollars to prevent further appreciation of the Brazilian currency, but these efforts are not strong enough.
I believe Brazil will start taking measure to prevent further appreeciation of the currency:
- Start taxing short-term investments in fixed income
- Establish a minimum period for short term investments in equity market and fixed income investments
- Introduce some kind of waiting line where money would stay on hold, waiting to acquire local assets
Clearly it’s good that the Central Bank sits on top of this so that the very good export results don’t get jeopardized by appreciating currency.
Tags: brazilian real
Jim Rogers says there will be a currency crisis posted on June 7th, 2009 at 2:07 am
[...] sell; I rather short bonds than stocks. 2. The Brazilian Real will be a safe haven towards the USD, yet the Brazilians will try to do everyting to prevent their currency from a crazy appreciation agai…, and they are right to do so. 3. Rather buy agriculture instead of gold or silver to protect [...]