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This Monday (17), the Argentine peso surpassed the Brazilian real at around 16 pm, placing Brazil in the position of worst exchange rate performance among emerging countries this year.
Until 16 pm, the dollar had accumulated an appreciation of 10,54% against the real in 2024. Later, however, there was a reduction in the difference in relation to the Argentine peso, with both countries showing a 10,48% drop in the currency in the year.
According to information on the website Infomoney, the dollar appreciated against the real today, despite having fallen in other global markets.
The DXY index, which assesses the dollar's strength against other developed currencies, fell around 0,2%. The day was marked by less global risk aversion, reflected by the increase in American stock markets.
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| Currency | Country of origin | YTD% |
| USDBRL | Brazil | -10.54 |
| USDARS | Argentina | -10.485 |
| USDTRY | Turkey | -10.12 |
| USDMXN | Mexico | -8.502 |
| USDTHB | Thailand | -6.956 |
| USDKRW | South Korea | -6.521 |
| USDIDR | Indonesia | -5.676 |
| USDCOP | Colombia | -4.876 |
| USDCLP | Chile | -5.738 |
| USDHUF | Hungary | -5.776 |
The influence of US interest rates on the weakening of the real
Experts interviewed by the cited portal say that higher interest rates in United States have been crucial to the devaluation of the real.
The heated American economy led the Federal Reserve to maintain high rates, attracting investment and strengthening the dollar. This has negatively impacted the real, with resources being directed to the American market.
According to Felipe Pontes, director of Avantgarde Asset Management, in an interview with the Infomoney portal, “American interest rates are seen as the global risk-free reference”.
“Currently, the US has rates around 5,5%, while in Brazil they are at 10,5%, resulting in a historically low spread of 5 percentage points, encouraging capital flight,” he said.
Internal impacts on the real
Internally, the increase in the so-called “Brazil risk” has contributed to the continuous devaluation of the real. Misaligned fiscal issues and political uncertainties have increased fears about the country's economic stability, negatively affecting the flow of foreign investment.
In this sense, also on the aforementioned portal, Rafael Perretti, economist at Clear Corretora, notes that “since February, Brazil's risk has increased, reflected in the CDS, which is at the highest level of the year. Fiscal and inflationary disorganization have contributed to this.”
What are the predictions and prospects for the future
The market has indicated a possible acceleration of inflation in Brazil, driven by fiscal and external factors such as weather conditions.
Recently, the Focus Bulletin recently revised upwards its projections for inflation in 2024. This could affect the Brazilian “real interest rate”, reducing the attractiveness of investments in the country compared to American securities.
Another factor in addition to those mentioned is the recent drop in commodity prices, such as oil and iron ore. Such facts, according to experts on the subject, have contributed to downward pressure on the real. The reduction in international prices negatively affects the Brazilian trade balance, adding more challenges to the stability of the currency.
On the other hand, in Argentina, the changes in economic policies carried out recently indicate a gradual recovery, influencing the relative approximation between the real and the Argentine peso.
