WoW! Six Reais!!! Incredible Exchange Rate!!!

11/08/24 @mikehunter fyi WISE kicked me off, because of some technicality. Do not put all your eggs in the WISE bucket.
Roddie in Retirement🕵 - @roddiesho

As I've written elsewhere, Wise is great - until it isn't.  I never had a bit of trouble with Wise but I suddenly had insoluble problems with their correspondent bank in São Paulo.  Wise was great about getting my money back to my US bank, but they have no control over their partners, so there wasn't anything else they could do.

In my opinion, anyone relying on transfer mechanisms outside the normal banking system should have a Plan B, just in case.  Ideally it will never be needed but being ready is better than being broke, even temporarily.

On the subject of exchange rate - one of the side effects of a higher dollar is possible inflation in Brazil.  Have prices gone up?  From the news, it appears that the inflation rate is around 6% - but are people feeling that?

Is it time to update our usual cost of living list?

Just wondering....

@Pablo888

Take a look at the historical rate of inflation in Brazil.

@alan279

From https://tradingeconomics.com/brazil/inf … of%201998, the average 2024 inflation rate (CPI) is estimated at 4.4 with a variance of 0.36.

The blip of the 1995 was most probably due to the introduction of the real.

This seems reasonable.

I suspect that the effects of the high exchange rates will only impact imported goods whereas the usual staples have kept up with inflation.

Of course, real estate will be a different issue as this will suffer from the gringo symptom even more...

How much is the price of espetinho de carne now?  I think that this was our general cost of living indicator before....

@Pablo888

Take a closer look at inflation in 2022 in Brazil. It was over 11%.

The McDonald's Big Mac index is generally used for international price comparisons.

the average 2024 inflation rate (CPI) is estimated at 4.4 with a variance of 0.36.The blip of the 1995 was most probably due to the introduction of the real.

This seems reasonable.
- @Pablo888

A wild guess at inflation. What does a variance mean?

11/10/24 I suspect that the effects of the high exchange rates will only impact imported goods whereas the usual staples have kept up with inflation. - @Pablo888

In the medium term, that discounts the imported content that's still contained in most Brazilian manufactured items, particularly machinery and capital goods in general, as well as spare parts. 

Brazil's deal with China to trade with each other in their own currencies will benefit Brazil somewhat, especially since the last time I looked (a few months ago) Brazil was running a trade surplus with China.  To the extent that China insists on world prices for its exports that will be less help against inflation, though, and Brazil will still need to look to G7 countries for a range of technologies and precision items.

In the longer term -- within two years, say -- I think that Trump's proposed economic and trade policies, if enacted as described, run a serious risk of plunging the United States into a recession, with at least some contagion worldwide.  In that scenario there will be many worries, but a strong Dollar will probably not be among them.

A wild guess at inflation. What does a variance mean?
- @alan279

Variance is a statistical estimate of the deviation from the mean....

11/10/24 I suspect that the effects of the high exchange rates will only impact imported goods whereas the usual staples have kept up with inflation. - @Pablo888
In the medium term, that discounts the imported content that's still contained in most Brazilian manufactured items, particularly machinery and capital goods in general, as well as spare parts.
- @abthree

Thank you @abthree.  Foods and usual non imported stuff will still be the same - but any imported materials will be slightly more expensive.

What will happen in a few years is anyone´s guess....

In the longer term -- within two years, say -- I think that Trump's proposed economic and trade policies, if enacted as described, run a serious risk of plunging the United States into a recession, with at least some contagion worldwide. In that scenario there will be many worries, but a strong Dollar will probably not be among them. - @abthree

Ugh.  Unfortunately,  I believe you are 100% correct.  The only hope is that the filibuster stays in place and the Democrats win the house.  Otherwise, the US economy will be a dog in Kristie Noem's gravel pit.

@Pablo888

I understand statistical variance. The inflation rate in Brazil has varied wildly over the years. Does the “mean” actually mean anything? And what do you put in your basket of prices to calculate inflation?

Is there a Case-Shiller home price index equivalent in Brazil?

In the longer term -- within two years, say -- I think that Trump's proposed economic and trade policies, if enacted as described, run a serious risk of plunging the United States into a recession, with at least some contagion worldwide. In that scenario there will be many worries, but a strong Dollar will probably not be among them. - @abthree

Trump has proposed economic and trade policies?

I about fell out of my chair when I read this headline: "Frustrated Americans who voted for Trump await the economic changes he promised". 

@Pablo888
I understand statistical variance. The inflation rate in Brazil has varied wildly over the years. Does the “mean” actually mean anything? And what do you put in your basket of prices to calculate inflation? - @alan279

@alan279, all the information that I stated was in the link provided.  The methodology is also explained there.  I think that what is included in the CPI is also explained.

I am just reporting what I read on the site.  A lot of Forex analysis companies use this source from which to make further assertions.

I am not a forex investor.  I was only wondering how people in Brazil would suffer from this currency fluctuation.

I am glad to hear that there will be minimal impact..

In the longer term -- within two years, say -- I think that Trump's proposed economic and trade policies, if enacted as described, run a serious risk of plunging the United States into a recession, with at least some contagion worldwide. In that scenario there will be many worries, but a strong Dollar will probably not be among them. - @abthree
Ugh. Unfortunately, I believe you are 100% correct. The only hope is that the filibuster stays in place and the Democrats win the house. Otherwise, the US economy will be a dog in Kristie Noem's gravel pit. - @mikehunter

@mikehunter - or people can even skip the whole 4 year of drama.  Here is an advert that targets people who want to forget the next 4 years....

https://www.dailymail.co.uk/news/articl … trump.html

11/11/24 @mikehunter - or people can even skip the whole 4 year of drama. Here is an advert that targets people who want to forget the next 4 years....
https://www.dailymail.co.uk/news/articl … trump.html - @Pablo888

@Pablo888 I love this -- thanks for posting.

Did I see this right? Is the American Dollar worth almost 6 Reais?
Roddie in Retirement🕵 - @roddiesho

5,76 today.

Demand for dollars might fall here on.   The Bilateral trade with China no longer require US dollars. 

And we trade with Russia, Iran, China, and just about every other sanction Nation there is. 

We are non aligned.

And the US Government is acting out of desperation as it is. Larger Embassy in Brasilia and Rio

Was told it will be 6.3 next year from some bankers

inflation is projected to be above goal range until 2027 with the selic rate at 13% the carry trade is appealing

@alan279

They call it a 'processing fee' but it's a spread in disguise.

@alan279

the 6,19 quoted by Google last week was a glitch

Not sure if this is relevant to the topic of exchange rate but this presentation from World Knowledge Forum 2024 in Incheon covers the world economic situation from the perspective of multiple people.

https://www.youtube.com/watch?v=gNgo4OmojBs

This MAY help understand what MAY happen in the future.