By Brennan Stark, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The U.S. dollar rose 1.78 percent against the Brazilian real according to Monday’s closing figures. The rise effectively leaves the dollar worth just over R$1.70, its highest level since December 2010, but still well below its five year high of R$2.50 in December 2008.
Although the U.S. economy continues to struggle, economic crises in Greece and Italy have diverted some to pull funds and investments and direct them at the less risky U.S. market.
“Everyone is very afraid of a Greek default,” Andre de Carvalho Ferreira, director of Nova Futura DTVM Ltda., a brokerage firm in Sao Paulo said in an interview with Bloomberg. “You never know what’s going to happen. There’s no upside to hold the real. There’s more to go.”
The last eight consecutive reports have indicated that the dollar has strengthened and, according to Abucater dos Santos, manager of foreign exchange at brokerage company ICAP Brasil, the dollar’s trend could continue to rise until it reached R$1.80.
One possible reason, dos Santos suggests, was early September’s cut in the basic interest rate in Brazil from 12.5 to twelve percent per year.
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