Real-ity bites

13 March 2020 By Anna Szymanski Follow @Three_Guineas

The former market darling’s currency has shed over 16% of its value versus the U.S. dollar this year, and its stock market is among the worst-performing in the world. Its trade position is weakening. And neither Brazil’s central bank nor its president have good policy options.

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Brazil’s Bovespa stock-market index has declined almost 40% since the beginning of this year. It rose around 30% in 2019. It is the world’s worst-performing major equity index so far this year, in dollar terms, as of March 12, according to Reuters.

The real has weakened by over 16% against the dollar so far this year, hitting all-time lows for this version of Brazil’s currency, which was introduced in 1994. It declined around 6% against the U.S. dollar in 2019.

Brazil’s economy ministry reduced its 2020 GDP growth forecast to 2.1% from 2.4% on March 11. It maintained its 2.5% growth forecast for the next three years.

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