Is The Brazilian Real Heading For Tougher Times?
We don’t often see too much news about the Brazilian real. This currency isn’t one of the world’s biggest or most notable ones. And yet it still goes up against every other world currency – big and small – every single day.
But it has had a poor start against the US dollar during August 2009. This has been evident in the news reports that have surfaced online, some of which have been on major websites such as Bloomberg. You can read their news story about the Brazilian real here.
So what has been happening then? Well let’s go back a month or so to the 10th July, to see how the stage for this latest news story has developed. Back then the Brazilian real was picking up just 0.4949 US dollars on the currency converter. But on the 13th it managed to break through the 0.50 barrier, if only just. By the time the markets closed that day the real had achieved an exchange rate of 0.5017.
Two days later it had achieved another high – this time of 0.5128. At this point it seemed as if the Brazilian Real had the upper hand over the US dollar, as the exchange rate kept on climbing. Five days later it had achieved another jump up to 0.5241, and it looked as though the week was set for some more increases as well.
The next day it improved to 0.5265, and even a slight dip the following day didn’t seem to dent its strength. After another couple of good days the real ended the week on 0.5288 against the dollar.
You would be forgiven at this stage, as we stop for a brief interlude, for thinking that the Bloomberg news story was wrong. After all, all the signs are that the Brazilian real is on the up against the US dollar. How could things change so much that we would get halfway through August and end up with some bad news?
Whatever lay ahead in August, July at least continued apace. The 27th July finished with a flourish on 0.5294, and the day after that the real pushed through another barrier to finish on 0.5329. It slipped a little the next day to land on 0.5286, but once again the slip seemed to be brief. Thursday that week saw the real end up with 0.5304 against the US dollar, while the week ended even better still on 0.5338.
We were into August now though, so perhaps we should sit up and pay more attention to those exchange rates. The 3rd August saw the Brazilian real put in more effort though, finishing on 0.5401, so there was still no sign of the story that was about to break.
The week was set to continue on a good note for the real, as it pummelled the dollar enough to end up with an exchange rate of 0.5449 on the Tuesday. But after peaking on 0.5512 the next day, things started to show signs of going the other way.
Thursday saw a marginal drop to 0.5499, but when that slid down further to 0.5451 to finish the week, it seemed as though that story was now in the offing. A brief respite on Monday 10th August saw the real climb back up to 0.5501, but Tuesday brought the news that sparked the Bloomberg story.
That was the day that it lost out on over 2% of its value against the US dollar. Finishing on 0.5391 at the end of the day – having lost 0.011 overnight – the Brazilian real clearly now has its work cut out for it for the rest of August.
It just goes to show though how quickly things can turn around. We should know this by now – we’ve seen it with the sudden drop in value of the British pound against the US dollar last year. And similarly this year in recent weeks the pound has struck back against the dollar.
And now it seems as if the Brazilian real has joined those ranks. It could be a temporary measure, but as the Bloomberg story points out, there is more to this than a simple hiccup that could soon be rectified.
It will be interesting to see how this plays out over the coming days and weeks. Will the real get real and get itself back into play against the US dollar? Or will the dollar finally be able to improve its standing against the Brazilian currency? Only time will tell – but we will be watching and waiting to find out.
