Brazil’s real has fallen past the dollar for the first time in ten years, highlighting a weakness in South America’s biggest economy.
Yahoo News reports:
The Brazilian currency closed at 3.01 to the US unit. Recent days have seen the real come close to breaching the mark with Wednesday bringing a close of 2.98 amid the ongoing political fallout of a spiraling corruption scandal at state-owned oil firm Petrobras.
The real has shed around one-third of its value against the US currency over the past two years as Brazil’s economy has slumped.
Now it is back almost to where it stood in August 2004, when a dollar fetched 3.0146 reais.
“There has been concern for some time. There are a range of factors which justify going through the three reais barrier,” Alex Agostini of Austin Rating told AFP.
Agostini cited high interest rates, inflationary pressures, tardy but needed fiscal reform and the Petrobras affair, which involved around $4 billion in kickbacks being distributed among politicians and businessmen in inflated contracts between 2004 and 2012.
The central bank on Wednesday hiked rates by a half-point to 12.75 percent, in a bid to keep rising prices in check.
The Petrobras scandal has meanwhile added to the climate of political turmoil as the government seeks to return the country to a path of growth following four years of slowdown.
“The outlook for the Brazilian economy is very black,” Agostini warned.
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