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Exchange Policy Perspectives of the Industry
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Following the Brazilian Economy:
Brazilian Public Debt
Internationl Reserves
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MAK
Editoração Eletrônica
marcos@rio-point.com
Revised:
Thursday, 10 July 2003.

http://ecen.com

The Brazilian exchange rate policy went through a dramatic change in January 1999. The behavior of this parameter in the last half of the century was analyzed by e&e within its characteristic medium and long term perspective. By expressing the GNP in real values using the exchange rate of 1994, one finds values quite different from those using the average nominal exchange rate corrected by the American Consumer Price Index. It is shown that the Brazilian Currency exchange rate relative to the American dollar in 1994 is very close to the average exchange rate along the period and practically coincides with that of the years when the foreign exchange transfer was very close to zero (equilibrium in balance of goods and services not debt related). The "equilibrium' exchange rate would be 1.39 R$/US$ in June 1999. A correlation between the deviation of exchange rate relative to the "equilibrium" rate and the foreign exchange transfer and it is estimated that in order to generate a positive foreign exchange rate of 4% of the GNP the rate is 1.60 US$/R$. If the previous behavior is repeated, once the present transition is overcome, the rate will be stabilized at levels substantially lower than the present ones, taking into consideration the inflation in Brazil and the United States.

FAPEMIG

The perspectives of growth for the Brazilian industry are analyzed through the evolution of some important parameters such as electricity consumption in industry, steel production, increase of vehicle fleet and the participation of industry in the GNP. The results make it questionable whether the competitive insertion in the global market will lead us to the desired economic growth.