When the Brazilian real was introduced in July 1994, it roughly maintained parity with the US dollar. But it’s since undergone a devaluation of more than 20% due to economic crises and insufficient currency inflows.
What affects USD > BRL exchange rates?
Exports from Japan and China
Both countries buy dollars to stabilize their currencies. This helps them create cheaper exports, which in turn makes their exports more attractive to world buyers.
The policies of the Federal Reserve
When the Fed stops distributing dollars (as just one example), it restricts the money supply. Hence, demand goes up.
US interest rates
Brazilian real is sensitive to changes in US interest rates that affect how foreign investments in emerging markets.
Policy changes in Asian countries
Brazil extensively trades with Asian countries like China, which means that its currency is affected by commercial policy changes in those countries.
US Dollar
The US dollar is the most traded currency in the world. The world’s unofficial reserve currency, it can be found in most major currency pairs. In forex, it’s an important benchmark and target rate for countries that fix or peg their currencies against its value. It is also used as the standard currency for oil, precious metals and other commodities.
Currency:
US Dollar
Currency Symbol:
$
Sub unit:
cents
Sub unit symbol:
c
Bank notes:
$1, $5, $10, $20, $50, $100
Coins:
1c, 5c, 10c, 25c, 50c
Brazilian Real
The Brazilian real is the official currency of Brazil, the largest economy in South America. The currency was introduced in 1994 to stabilize the economy after growing inflation.
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