Natal Brazil

Information about the city of Natal, in Brazil.

Tuesday, May 15, 2007

Dollar breaks the R$2 barrier

Today, for the first time since February of 2001, the dollar fell below the R$ 2 barrier: markets closed with the course of US$1 = R$ 1.9890.

In 2002 and 2003, the dollar reached almost US$ 4, because President Lula used to defend ideas like non-payment of debts, punishment to wild capitalists, etc. However, after taking office, Lula continued (and in many cases deepened) the orthodox measures implanted by ex-President Fernando Henrique Cardoso. This continuity of Economy policies, along with the excellent conditions of the international financial market, caused the dollar to fall since 2004.

This is bad news for foreign tourists, and for businesses which depend on tourism.
Many Brazilian tourists are preferring a trip to Miami or Buenos Aires rather than the Northeast, because prices in dollar are falling.
On the other hand, tourists who bring dollars to spend in Brazil are seeing their money buying less and less.
The euro has not been loosing much to the Real, so prices in euros are not going up. However, with the increase of Brazilians travelling abroad (and they must return, eventually), airline companies have less seats to sell to foreigns; this decreases availability and increases prices of tickets.

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Blogger tiger said...

The appeal of Brazil and what the Northeast offers ... constant sunshine, beautiful beaches, and outdoor activities still appeals to foreigners. However the ticket price increase due to international travel by brazilians is something to deal with. It's not cheap to get there from the U.S.

10:50 PM  
Blogger Issamu said...

Not only hotel owners in Natal are complaining; several sectors of Brazilian industry are asking for government help (tax reduction, higher import tariffs) and threatening with lay-offs.
According to analysts, this trend (strong real, weak dollar) should continue.
The public finances in Brazil are better than ever (inflation is low, interest rates are falling, public deficit is decreasing, etc), some sectors of the Economy are growing, the country continually consolidates the image of a Democracy.
This has been causing an increase in the influx of investments (dollars), which in turn causes the dollar to fall. Brazil is about to be considered an 'investment grade' country by the risk analysis agencies, and this should result in another increase in investments.

In short: it should take a long time for the dollar return to the R$ 3 level we once saw.

11:54 AM  

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