Brazilian Real Benefits

The appreciation of the Brazilian Real, benefiting the industry in argentina? 15 May 2009 Argentine industrialists probably devote too much time to observe the evolution of the Brazilian Real, since their problems go beyond the single evolution of the currency of Brazil. However, the depreciation of the Real since August of 2008 until the end of the year had generated deep concern, to the point that the Argentine President Cristina Fernandez de Kirchner was evaluating measures to prevent a potential invasion of Brazilian products. The reality has changed sharply and today the nominal ratio between the Argentine peso and the actual returns to be favourable for the Argentina. On the day of yesterday, a note published by El Cronista, reflected the relief felt by Argentine industrialists by the appreciation that is watching the real and the devaluation of the last months of the Argentine currency, which together represented a significant improvement in the exchange rate relationship with Brazil. Anyway, despite the current relief and fears past, Argentina at any time suffered the invasion of Brazilian products. Is that Argentina had an extremely effective weapon to limit imports: a sharp fall in domestic demand.

The slowdown in activity in the Argentine economy was such that Argentine imports from Brazil fell with force. A piece of information in this regard: in the month of April, imports fell 40.1% in interannual terms (in March fall was 33.3%). The relationship between the real and the weight has been observed a great variation certainly since the third quarter of 2008. The real has gone from a maximum of $1.955 in early August at a minimum of $1,326 in early December. The Argentine peso thus suffered a strong appreciation in relation to the real despite the devaluation observed the Argentine currency against the U.S. dollar. The beginning of 2009 is the real recovering value against the U.S.