Brazilian Real Plummets to a 26-Month Low Against the US Dollar

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – The Brazilian real took another dive on Thursday against the U.S. dollar, with the North American currency registering an appreciation of 2.3 percent during the day and closing at R$3.926/US$1. Brazilian officials rushed to calm investors as the domestic currency reached the lowest value since March 1, 2016.

“There is no risk of a currency crisis in Brazil,” Brazil’s President Michel Temer said in a TV interview with government-run TV Brasil on Thursday.

According to President Temer, the country has reserves of US$380 billion and continues to receive investments from foreign companies.

During the trading day, the foreign exchange rate went as high as R$3.9684/US$1, retreating only after the Central Bank announce the negotiation of more than US$6.8 billion of foreign exchange swap contracts,

“The Central Bank and the Treasury will continue to offer liquidity to the market in a coordinated manner, either in the foreign exchange market or in the interest market, as long as it is necessary,” said Central Bank (CB) president, Ilan Goldfajn, in a press conference after the closing of the market.

The CB president said the government would be offering an additional US$20 billion in the futures market by the end of next week, to try to reduce the foreign exchange volatility.

In some foreign exchange bureaus in São Paulo, the rate was as high as R$4.30/US$1 for pre-paid credit cards.

Brazilians thinking about travelling abroad during the July holidays are re-evaluating their plans. “It’s not just the plane ticket. I have to purchase currency to live there for twenty days, plus hotel, plus food,” says discouraged university student Maria Ribeiro, who had reserved a ticket to New York in July.

With the devaluation of the Brazilian real Ribeiro is now contemplating going instead to a beach in the Northeastern region of the country.

Since February, the U.S. dollar has accumulated a high of 23.44 percent in relation to the Brazilian real.