Get PJ Media on your Apple

VodkaPundit

Brazil Is in Real Trouble Now

February 3rd, 2014 - 3:10 pm

With a capital T and that rhymes with C and that stands for currency:

The real fell for a second straight session, depreciating 0.5 percent to 2.4243 per U.S. dollar at 1:17 p.m. in Sao Paulo after climbing 0.5 percent earlier today. Swap rates on contracts maturing in January 2015 rose three basis points, or 0.03 percentage point, to 11.72 percent.

Brazil’s currency will decline to 2.47 per dollar at year-end, according to the median of about 100 estimates in a central bank survey published today, compared with the forecast of 2.45 a week ago. Policy makers will raise the target lending rate to 11.88 percent next year, compared with the previous week’s projection of 11.50 percent.

“There is a very high stress regarding emerging markets,” Solange Srour, the chief economist at ARX Investimentos, said in a phone interview from in Rio de Janeiro. “The depreciation of the real should continue and the tendency is to have it between 2.50 and 2.60 by year-end.”

I saw something from Zero Hedge on Twitter earlier today that Mexico too faces similar “external” troubles. C might also stand for “collapse,” as in the emerging markets bubble that’s ready to pop.

Comments are closed.

All Comments   (4)
All Comments   (4)
Sort: Newest Oldest Top Rated
I'm afraid that when Argentina goes the rest of the world will follow in short order.
Creditanstalt v2.0. The first domino.
24 weeks ago
24 weeks ago Link To Comment

Argentina has done a rather good job of quarantining itself already.

Brazil is another matter entirely. So is Japan.
24 weeks ago
24 weeks ago Link To Comment

International investment is collapsing and captial flows are racing to the dollar because of a few things. First, Americans are finding out that the IRS has crippled our ability to invest outside the U.S. Nobody will do business with us anymore, so no capital outflows from the dollar. Second, Europe keeps rattling the confiscation saber, threatening to "bail-in" 10% or so of all bank account balances in order to shore up the government debt situation. So, cash is naturally headed out of the Euro for real-property investments in America. Third, velocity of money is slowing due to reduced household discretionary spending in the U.S., because of higher taxes and regulation.

All that means dollar deflation. It's hitting the relatively-weak commodity-heavy third world economies right now. It'll ricochet around and land back onshore pretty soon. It could be that the stock market is sniffing out the same thing, and that's why it's down today.

Maybe we should start a betting pool on the first Yellen round of QE.
24 weeks ago
24 weeks ago Link To Comment
obama will be happy to collapse the dollar faster to help them out.
24 weeks ago
24 weeks ago Link To Comment
View All