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On Monday (17), the Argentine peso surpassed the Brazilian real around 4 PM, placing Brazil in the position of the worst currency performance among emerging countries this year.
By 4 PM, the dollar had accumulated a 10.54% appreciation against the real in 2024. Later, however, there was a reduction in the difference against the Argentine peso, with both countries showing a drop of 10.48% in their currencies for the year.
According to information from the site Infomoney, the dollar appreciated against the real today, despite having fallen in other global markets.
The DXY index, which evaluates the strength of the dollar against other developed currencies, fell by about 0.2%. The day was marked by lower global risk aversion, reflected by the rise in U.S. 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 Interest Rates in the U.S. on the Weakening of the Real
Experts consulted by the mentioned portal say that higher interest rates in the United States have been crucial for the depreciation of the real.
The heated American economy led the Federal Reserve to maintain high rates, attracting investments 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 Infomoney, “American interest rates are seen as the global benchmark free of risk.”
“Currently, the U.S. 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 depreciation of the real. Misaligned fiscal issues and political uncertainties have heightened fears regarding the country’s economic stability, negatively affecting the flow of foreign investments.
In this regard, also to the mentioned portal, Rafael Perretti, economist at Clear Corretora, notes that “since February, Brazil risk has been rising, reflected in the CDS, which is at its highest level of the year. The fiscal and inflationary disorganization has contributed to this.”
What Are the Forecasts and Perspectives 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 revised its projections for inflation in 2024 upwards. This may affect the Brazilian “real interest rate,” decreasing the attractiveness of investments in the country compared to American securities.
Another factor beyond those mentioned is the recent decline in commodity prices, such as oil and iron ore. Such events, according to experts, have contributed to downward pressure on the real. The reduction in international prices negatively impacts Brazil’s trade balance, adding more challenges to the currency’s stability.
On the other hand, in Argentina, the recent changes in economic policies indicate a gradual recovery, influencing the relative approach between the real and the Argentine peso.
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