Dollar to Real

What's noteworthy to me is,oil skyrocketing,real falling fast,think there is a lot of anti American sentiment in the world,dollar still the world currency,but what's happening in Brazil is oxymoronic.

@boombop4477

I would agree. l was full well expecting to see the dollar continue to shrink.

Lula is a socialist to many,could be a factor

Dedollarization's full effects will take 2-3 years........

Why would anybody(country or corporation) want or need the Real? It's a depreciating currency and on top of this the Government prints money almost as fast as Argentina. Bad recipe for a strengthening currency.  Low demand by the world and a Government that loves printing money to pay for their friends 5 million dollar Sao Paulo Jardins house and you get 5 to 1 real. I see 6 or even 7 coming in the future. The past 3 years has been a sideways consolidation that will result in much higher prices over the next 5 years. Great for expats bad for Brazilians. Some things never change.

There have been talks between Brazil and Argentina to create a common currency. It's probably very far from happening, but it's interesting to see, especially considering Argentina's money printing power 😂

I don't think Haddad is that stupid

........Dilma on the other hand........kkkkkkkk

It's a great time to buy Real Estate. 5 to 1 exchange is historic.

@KenAquarius Please check the fluctations in the last few days. I think the looming Government Shutdown may have effected the exchange rate.

@roddiesho I have an app that l get hourly updates.

As l mentioned on the other thread the whole ”shutdown” is just postering by both sides. If it were those bastards paychecks in jeopardy, it would be solved instantly.

  09/28/23  @KenAquarius Please check the fluctations in the last few days. I think the looming Government Shutdown may have effected the exchange rate.   

    -@roddiesho

I'm just glad that Social Security is paid to Brazil residents on the third of the month!  That was quite an upgrade for me, since I have a middle-of-the-month birthday. 😂

  09/28/23  There have been talks between Brazil and Argentina to create a common currency. It's probably very far from happening, but it's interesting to see, especially considering Argentina's money printing power 😂   

    -@martinsan

I certainly agree on the "very far from happening".  I lived here during the times of hyperinflation, and so did Lula:  currency stability was a hard-won prize and getting there was painful, no Brazilian wants to go back to those bad old days (no, Brazil is NOT "running the printing presses" now) and there are safeguards in place, like the independent Central Bank, to prevent it.  Lula is serious, especially for a Brazilian politician, about integration with neighbors, but not at the cost of importing Argentine inflation, I don't think.

But would Argentina be willing to adopt the Real as its currency, and "Real-ize" it's economy, the way that Ecuador "dollarized"? That would certainly be a shortcut to a common currency, and to currency stability for Argentina.  Obviously the groups that profit from the instability would be opposed; would they have a veto?

Lula has leftist leanings,however Brazil s economy is very diverse,Lula actually has accused Biden of being responsible for the war,will say owning pbr was a good idea, being anti dollar goes hand in hand w anti American, which has been prevalent in latam.But,with oil rising,and real dropping,would not short the dollar yet.

@abthree A presidential candidate, Milei, has plans to adopt the US dollar as the official currency. Inflation there is becoming unbearable. I wonder how it will play out if he gets elected and if he will have support from Congress, etc...

@expat5000

The Brazil debt-to-gdp ratio is around .77 these days ......while the USA is closer to 1.25 ... the only advantage that the USA has is its employment as world reserve currency, but it is pissing that away with all of the sanctions and restrictions it tries to place on other countries.

The Brazil inflation rate has been consistently lower than the USA for the past several seasons.

Brazil is a net exporter of oil, as well as meat, soy, iron ore, gold, and some other things.  The USA has a massive trade deficit.

The total Brazil government annual budget is lower than what the USA spends upon debt service alone, and that number is rising rapidly.....

The markets tend to be extremely conservative and backward-looking, and it will never catch up to the trends.  In any kind of worldwide downturn, there is still a tendency to run to the USA thinking that it is more stable.

Particularly by people who dont understand what is really happening in that country......

@Inubia

Are you referring to the States? What do you mean by "what is happening in the country?

I am curious about your opinion, as i have been out of the US for six years... Just in general terms... Claudia

    Reports of the old girl’s death have been greatly exaggerated!  No, I’m not talking about Betty White. I’m talking about the good old US dollar. She is back at 5 to 1 over the Real. At least for the moment…stay tuned!-@KenAquarius

Not an economist or quant specialist but...

The Real is kept at a high conversion rate to favor Brazil's commodity exports, which at the moment are  Cotton, soybeans, beef, corn, coffee, tropical fruits, iron ore, pork bellies.

Also, the number of  commercial lenders in Brazil has dwindled due to Banking Consolidation in Brazil.  And these banks tend to move waves when they place currency buy orders. 

The amount of US Treasury Notes held by Brazil's  Banco Central has remained the same over the last 3 years, around USD 350 billion.  All sovereign debt. Most of the issued US debt is bought by Americans, Institutional Buyers, and the Federal Reserve. Sovereign Debt placed orders is dead last.

When one country needs US dollars to either replace its failing currency ( i.e. Argentina ), or to foster imports / exports, often times a chunk of US Debt offering  is pushed through to sweeten the swap of rotten currency for US green backs.  I stand to be incorrect on this one, so I dare to be challenged. Step up to the soap box, please.

Tourism demand foor dollars only count when the dollar is pegged at a lower rate,  Even then, Brazil holds the top ten in Visa requests by tourists, here is a list for 2022, figures in millions.

Mexico. 18.1.

United Kingdom. 4.8.

Japan. 3.8.

China. 2.8.

South Korea. 2.3.

Brazil. 2.1.

Germany. 2.1.

France. 1.8

I am sure you are all aware that Russia, Turkey, and China have dumped their US Debt holdings severely. 

Japan has increased it's US Debt buy orders, mostly, I surmise, through previously issued debt notes.

Way back in the 80's Auto Parts Manufacturers, Commodities exporters, created a considerable demand for dollars from Banco Central. Small wire transfers and small exporters went to the Black Market., or Doleiros. 

Doleiros buying power has grown considerably.

Yes, the US dollar remains unchallenged. No BRIC currency is set to challenge it any soon.

Folks, I am not the only one thinking it so.  Watch and or read Peter Zeihan.  He has broached the Dollar Strenght and Hegemony in years to come in a number of his Youtube Videos. He is good to watch. Not a Forex guy,, just a man with a good track record on forecasts.

    What's noteworthy to me is,oil skyrocketing,real falling fast,think there is a lot of anti American sentiment in the world,dollar still the world currency,but what's happening in Brazil is oxymoronic.
   

    -@boombop4477

Regardless of who sits at the throne in Brasilia, the demand for Dollars in Brazil has always been high, ever since I was a teenager. 

The very few times we had a large surge on the dollar to real ( maxi valorizacao ) was way back in the late 70's, and a re arranged on the exchange rates took place.

Then  former President Fernando Henrique Cardoso reset the Brazilian Currency to parity with the US Dollar , late 90's under the plano Real, a policy that virtually eradicated runaway inflation.

@Inubia

I respectfully disagree.

You make Brazil sound like it's doing all the right things, when in fact they do all the wrong things to prevent sky high inflation that has come down recently yes but still elevated for the COMMON MAN. Brazil has a buddy system I call it, In it's industries and they squeeze out competition if you aren't part of their club or group of friends. I saw it everyday while living in Sao Paulo for over a year and a half. I was there during the massive inflation spike recently that was absolutely caused by lack of competition and pure greed on the producers end. I witnessed a spike in some products over 100% in price in a few month span literally.  For example, I like heavy cream. The pure form. There is literally a few companies that make pure heavy cream. Unless there was massive demand that I didn't see, which there wasnt, literally overnight all of the heavy cream spiked by amounts close to 100%. This is absolutely greed and criminal, as there was always a supply of outdated cream later in the week, that never sold. Forget deficits, debt, yadyadayada. This is all conjecture, because the real issue is these producers were not facing any spike in input costs whatsoever, because they have the local commodities to make these products and they are not a slave to the worlds commodity increases per se as it's all domestic. unlike the USA, Brazil did not raise wages to compensate or help out there labor force so their main input cost remained stable. I could go on about their scam paper and plastic industries that are completely void of any competition at all. The club. To buy about maybe 8 plastic storage bags for kitchen use is like 20real and up. All sold by one company. This SHIT never happens in the USA EVER.

Everybody likes to slam the USA but the USA does sooo much better at letting competition run free. Brazil fails miserably at this and the social elite that run that country are to blame for the such a dead beat country economically.

Brazils central bank prints money almost as much as Argentina. How is this even a doubt. Amazingly Bolsonaro appeared to print the most ever in recent memory, at least since their last default years ago. The currency and markets never lie. Forex is next to impossible to manipulate if you are doing damage ..i.e Printing money hand over fist. besides Nobody wants the Real.

Brazil and it's people, common man are truly an amazing thing. However the elite that control the path and current rate of the country are one of the most evil and corrupt i have ever seen in anywhere. The divide of Super Rich in Sao paulo and Poor or working class is astronomical. never seen anything like it.

But hey if you're in their Club, well lifes great and you can buy to hearts desire and have an endless supply of cheap labor at your disposal. So sad for the regular Brazilian.

09/28/23  I don't know where this idea that "Brazil's Central Bank prints money almost as much as Argentina" comes from.  It's often repeated, but neither the facts nor the inflation rate bear it out.  Here are the actual numbers for this year; the chart can be adjusted for longer or shorter views, and I find the five year view especially informative:

https://tradingeconomics.com/brazil/money-supply-m1

As you can see, the money supply took a big jump in 2000 -- for the pandemic, as it did in a lot of countries.  I fault Bozo for a lot of things, but not for that:  as in the US, flooding the economy with money saved a lot of lives.  Prior to that, and since then, money supply growth has been stable and  consistent with economic growth.

Inflation here in the North has been pretty bad, but it hasn't affected staples nearly as much as it has specialty products like heavy cream, which is practically unobtainable here in Manaus anytime, on any terms anyway.  Almost everything here that isn't harvested from the forest comes from somewhere else; transportation is the big cost driver, and our inflation has tracked transportation costs pretty much.  Bizarrely, we've saved a lot of money by increasing our Amazon Prime purchases of package goods, rather than buying them locally, thanks to free shipping. 

There is no question that competition is not encouraged in this very protectionist society and that certainly has a negative effect on prices -- but protection has been the policy of Brazilian governments, Right or Left, democratic or dictatorship, for the 50+ years I've been studying this country, and I don't expect it to change soon. 

It has seemed to me for the past couple of years that the Real has been overvalued in terms of fundamentals and has been defying gravity, and I haven't been able to figure out why.  I think that sprealestatebroker is onto something with the suggestion that the rate has been supported to favor commodity exports.  That kind of support can't last forever, and may be being phased out.  I wouldn't be surprised to see a six dollar Real again within a year or so, although I wouldn't expect it to decline very quickly beyond that.

@abthree

"rate has been supported to favor commodity exports" You are saying that the Brazilian Gov or Central bank as the ability to control where the real goes. In other words they are manipulating forex of the real. I 100% disagree with this idea. Forex is absolutely impossible to manipulate as it's way too big and is global. Yes the central bank can influence it based on it's policies but this is brief and thereafter the market takes over.  Argentina has tried many times to manipulate their currency and has failed every single time. South American countries can not manipulate their currency without drastic dire results in return. Brazil is just riding in the dark and seeing what's sticks, from my perspective.  Agreed on the competition issue. Never will change without a revolution. This may be the single one issue that prevents lower prices. My heavy cream example was just an example of many I could mention. Yes, staples are stable I do agree but if you want to upgrade your lifestyle in Brazil the prices are very close to USA and Europe prices EX housing mind you. However relative to income most  housing is very expensive to the average Brazilian, comprising over 50% of their income going to a place to stay. So if you want to live in a poor area in Brazil and ok living around infrastructure that may remind you of the middles ages then yes Brazil is fine for the Average citizen.

The Real now at 5 to 1 and soon to 6 or 7 is proof that they are printing money hand over fist. Maybe not as much as MArch-December 2020 but they still are. The difference is nobody is on the other side buying their worthless money. Thus it keeps getting devalued. Lula ironically will probably help the Real. Bozo simply printed to no end to in rich his elite base.

I learned alot living with a middle class Brazilian and I saw first hand how the Government tries to squeeze them to no end.  It's a constant daily battle just to try to mimic an average USA citizen lifestyle wise.

In brazil faking it till you make it is a thing and it's certainly a sad display of frustration with the Country that has very hard entry points for great and ethical workers. Being a corporate criminal or just a person born into the right family is the only way to make in Brazil. Who you know is much more important than your abilities.  Amazing country, Amazing surprisingly relaxed people given their circumstances but it's the absolutely worst place to live for a Brazilian, as odd as that sounds.

The Dollar Exchange Rate in Brazil is a result of  currency demand. 

There are two sources one can buy US Dollars on the wholesale market..  One from the Banco Central.  Who buys directly from the US Treasury Department ( mind you, not the FED ).  And who does incentivize the sales of US Denominated Government Debt, mostly Federal. 

The Secondary market, or black market, sources /  trades from what Doleiros can bring into the country. They trade their exchanges at a higher rate, when demand for the Dollar is high.

Definetively, the market maker, or the 800 lb gorilla, is the Banco Central, which is our equivalent to the US Federal Reserve.  Their sheer volume buy determines , in large part, what the official exchange rate will be.

Forex Traders  hedge their bets on the available quantity of dollars, mostly based on what the Banco Central Dollars.  Doleiro's  buy-sell don't match the trading volume the Banco Central can avail. 

There is also the Currency Exchange Outlets, that take their supplies from buy-sell operations at retail, and make up their shortfall from Doleiros. Their rates and adjusted spreads are based upon the posted rates by the Banco Central. 

Since Banco Central  is a Federal Government's Entity, it is safe to assume that the Brazilian Government sways a lot of influence on exchange rates. 

It is no secret that our Trade Balance plays a significant role in what the  Banco Central's trading volume determines.  The Exporting of Commodities and , to a lesser extent, Industrial Output, and our anticipated and heavily taxed imports heavily influence what the Dollar Reserves need to be at. 

AS for the Federal Government Political Influence on rates, this used to be a lot more pronounced in the past,. Nowadays, rates reflect market based demand and supply,more than any political whims. 

No, I do not drink from the Company Koolaid. it's just my outlook and perspective, after observing these trends for over 40 years, both in Brazil and the USA. 

Real down to 515,last week when oil took off and the real fell,I realized that shorting the dollar was a risky move, death of the dollar?Not this year