Brazil Real has been rising fast. Caution to traveller

Discussion in 'Brazil' started by jbcarioca, Apr 8, 2011.  |  Print Topic

  1. jbcarioca
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    jbcarioca Gold Member

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    During the last several years the Real has been steadily becoming stronger. Now the movement is accelerating again. The trading on April 7 had the US$ as low as R$1.58. Because of this and high demand prices are quite high in Brazil, especially Rio de Janeiro and Sao Paulo. For people who have made hotel reservations it is good to remember that unless they are prepaid they are probably subject to change based on exchange rate fluctuations.

    Nobody can predict the future, but it is probable that this situation may continue because there is a huge flood of foreign investments flowing into Brazil and the petroleum industry is growing rapidly, just as investments for the 2014 World Cup and 2016 olympics as ramping up. Nobody seems inclined to bet against the Real at the moment. The Central Bank and government have been trying to slow the strengthening. so far without success.

    For people who remember the hyperinflation of the 1980's this is a really unusual situation, good for us as residents because our imports are becoming cheaper every day.
     
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  2. Gaucho
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    Gaucho Gold Member

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    This is good news for the tourism industry in Argentina.
     
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  3. jbcarioca
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    jbcarioca Gold Member

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    Yes, that is true. Now we leave the country to buy everything because it is so much cheaper to buy anything anywhere. BTW, JW Double Black now sells in US duty free for US$75 for two bottles of one litre each.
     
  4. Gaucho
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    Gaucho Gold Member

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    Where did you see the JWDB for that price...?
     
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  5. jbcarioca
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    Both MIA and CLT Duty Free. I'm going again tonight so I can bring you some if you like.
     
  6. Gaucho
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    Back on topic... I expect Dilma may resort to additional capital flow restrictions to try to keep the Super Real in check.... In the mean time, the Argentine economy with its USD inflation (due to our own FX woes) is hugely grateful the Real continues to appreciate.
     
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  7. jbcarioca
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    jbcarioca Gold Member

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    There is additional IOF (tax on foreign expenditures) of 6% or Brazilians using credit cards abroad, but that does not stop any of us with foreign bank accounts because there the IOF is .32%. The capital inflows were more amazing just this year. The 1st quarter 2010 inflows were $2.8bn which was very high. This year 1st quarter was $35.6bn, with no end in sight. The US$ has falled 8% in the last year.

    There are many reasons for all this but one of the largest may be the highest real interest rates in the world in Brazil coupled with very low or negative real interest rates for the Euro and the US$. The Real looks good on that basis.

    In the meantime we are doing our best to unilaterally bail out Argentina. BTW, Gaucho, what proportion of your sales are to Brazilians these days?
     
  8. Gaucho
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    I would add the endemic weakness of the US Dollar as another reason that fuels the rise of the Real.

    Brazilians account for a little over 10% of my sales... I lose a lot of business because of Brazilian Customs at GRU and the fact that shipping wine to Brazil is basically impossible... its bizzare to see how useless MercoSur is for a lot of things that should be seamless.
     
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  9. jbcarioca
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    jbcarioca Gold Member

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    Yes and yes. I am always surprised at the difference with Immigration and Customs between GIG and GRU. Not entering at GRU is worth trouble for me.I really dislike the entire GRU experience. GIG is always easy, by comparison, and my case of wine always gets in duty free as does my JW DB. Not so at GRU, even through the rules are meant to be the same.
     

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