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Understand the impacts of a surge in the dollar on the Brazilian economy
A significant increase in dollar can trigger a series of economic and social impacts in Brazil. As the Brazilian economy is strongly connected to the international market, a surge in the US currency would affect everything from the population's cost of living to the performance of key sectors of the economy.
With the dollar hitting record highs in 2024, according to the Central Bank and financial market experts, concerns are only growing. But what could happen if the dollar rises even further?
Inflation: the first reflection of the rise of the dollar
O dollar is a crucial currency for international transactions and for exchanging many products we consume. When its price rises, the cost of importing products such as foods, fuels e Electronic, also increases. In recent months, the devaluation of the Real and the rise of the dollar have contributed to accumulated inflation reaching worrying levels. Learn more about the impact of the devaluation of the Real.
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This increase in cost ends up being passed on to consumers, increasing the inflation and directly affecting families' purchasing power. According to the IBGE, the rise in fuel prices has already caused significant increases in transportation and food prices. Inflationary pressure compromises family budgets, especially for the lower classes, exacerbating the problem of hunger and food insecurity, which reach millions of Brazilians.
Devaluation of the Real and loss of confidence
A sharp rise in the dollar also indicates a devaluation of the Real, a reflection of investors' lack of confidence in the Brazilian economy. This situation was reinforced by reports from the Wall Street Journal and Bloomberg, which highlighted the flight of foreign capital from the country amid signs of political and economic instability.
The vicious circle is clear: capital flight increases pressure on the exchange rate, and the Real depreciates even further. To try to contain this situation, the central bank has intervened in the market, burning international reservations and raising interest rates. However, these measures have not been enough to stabilize the exchange rate or restore market confidence. Check out how the Central Bank has dealt with this crisis.
Hunger and unemployment on the rise
The rise of the dollar intensifies social problems such as hunger and the unemployment. Basic products, such as rice, beans and cooking oil, are among the items most affected by inflation, making them inaccessible to many families. According to the UN, Brazil has left the hunger map in 2023, but the scenario could reverse if the exchange rate devaluation in 2024 continues.
Furthermore, sectors that depend on imported inputs, such as industry and construction, are struggling to meet costs. Companies, especially small and medium-sized ones, are forced to reduce production or lay off employees, increasing unemployment rates and making the job market even more precarious. Learn more about the impact of public spending and super salaries on the economy.
Impacts on the domestic and foreign markets
The rise of the dollar also directly affects the productive setor and Brazil's trade relations with other countries. Companies that depend on imports to produce face higher costs, which reduces their competitiveness both in the domestic and international markets.
On the other hand, agribusiness, which represents a significant part of Brazilian exports, can benefit, as it receives payments in dollars. However, the gains in this sector are not enough to compensate for the losses in other segments and in the quality of life of the population.
Political and social consequences
The dollar's surge would also have political consequences significant. Governments could be pressured to implement emergency, often unpopular, measures, such as cuts to social programs or tax increases. Such decisions could deepen popular discontent and increase political instability. Check out forecasts for the Brazilian economy in 2025.
In the social aspect, the increase in hunger. unemployment and inequality would create an environment of growing tension, making governance difficult and further damaging Brazil's image abroad. The lack of trust in the government also affects diplomatic and trade relations, limiting access to financing and international partnerships.
What can Brazil do to avoid this scenario?
To minimize the impacts of a significant rise in the dollar, the government needs to adopt policies that increase confidence in the market and stimulate economic growth. Some measures include:
- Tax reforms to reduce public spending and balance the accounts.
- Infrastructure investments and education to increase productivity.
- Reducing dependence on imports, stimulating national production.
- Promotion of an agenda of foreign investments, creating a more attractive economic environment.
- Ensure independence of the Central Bank, allowing a monetary policy focused on stability.
The role of the population and companies
While the government seeks solutions, the population and companies also need to adapt. For families, avoiding debt and prioritizing essential expenses is essential in times of high inflation. For companies, seeking alternatives to reduce costs and increase efficiency can help them get through this turbulent period.
If the dollar goes up too much, Brazil will face serious challenges, since the increase in inflation until the loss of investor confidence, delving into problems such as hunger, unemployment e social inequality. To avoid this scenario, it is crucial that the government adopt measures that promote economic stability and minimize the impacts on the population. The question that remains is: will we be prepared to face a surge in the dollar and its consequences?
This diagnosis and recommendation to the government are very basic. What is happening with the dollar's surge and the Selic rate's rise is a herd effect of financial market speculators guided by Faria Lima agents claiming a lack of credibility, rationality, seriousness and trust in the government led by the defenders of populist Lulaism.
The Central Bank has recently demonstrated a lack of responsibility and priority in defending the interests of the financial market to the detriment of the country's economy. Raising the Selic rate above what is reasonable only helps to take the country to the bottom of the well with recession, unemployment and a deficit in the government's public accounts.
Speculative movement by Faria Lima??? LOL... The market in general, and even my ****, are pricing in the economic disaster of this wasteful and debauched government. If you want to pay the bill for these corrupt politicians, you pay... speculative movement, come on... tst tst tst
Towards the abyss
We would be in an abyss if **** had completed the coup d'état and today we would be a Venezuela
It shows in the history of the world that old people with bibles or flags in their hands carried out a coup d'état, you must believe in Saci Perere and Headless Mule, and also in Lula's picanha!
And generals who were plotting a coup using $publicco. What is this then?
The right-wing excrement spreads panic and lies.
In a fairer country everyone would be in ****.
This is already despair in advance of 2026! They continue to suffer from defeat and are unhappy!!!
We are very close to Venezuela, politics and justice are already at this level, while the Brazilian economy is sinking every day into trillions of dollars in debt with social spending that maintains poverty and this is the real intention of the Brazilian government, to keep the people poor so that these people depend more and more on the government, thus keeping themselves in power with the poor voting to maintain the aid to misery without work.
Investment in quality education? NEVER, here in Brazil, where students pass the year simply by being present in the classroom, where nothing is learned, but in the name of the education funds, schools receive these funds that are diverted and thus the country of Brazil remains in the 3rd world for centuries and centuries.
Brazil..zil…zil!!🤡🤡💩🤑🤑🤑🤑