Thursday, December 23, 2010

Brazil´s Lula Government: Real Currency Appreciates 108%

The highest interest rates in the world coupled with the collapse of the U.S. dollar, contributed to Brazil's currency having had the highest appreciation in the past eight years.

According to research from consultancy firm Economática, until yesterday, the Brazilian Real gained 108.16% during the Lula government until December 21, 2010, almost double the value recorded for the Chilean peso (53.14%) and the Colombian peso ( 48.5%) in the same period, and nearly four times the appreciation of the Peruvian sol (25.2%).

The strengthening of the real against the dollar also was more intense in comparison with the European currency, which appreciated 24.9% during this period, yet according to the consultancy.

In three countries, local currencies depreciated against the dollar, considering the last eight years: Argentina (-15.2%), Mexico (-16%) and Venezuela (-67.3%). Jointly, the three countries have faced or are facing severe economic crises.

Economática noted that over the past eight years, in only one year (2008) the Real devalued against the dollar, a decline of 24.2%. It was precisely during 2008 that the world financial crisis broke out, which triggered a rush by investors to the U.S. currency, seeking protection.

We track all currency ETFs live here. BZF is the Brazilian currency ETF. Note that BZF had a quarterly distribution yesterday.

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