Death comes to us all. Life's but a walking shadow | What are the actual economic circumstances which explain why the Brazilian Real has become so much weaker? What fundamental economic output either in Brazil or the US has changed? We pay attention to the size of the soybean crop but does a 9MMT increase (86-95) explain this change? That's not likely.
The thing I find interesting is that averaged over the past few months the increase in the price of soybeans priced in Reals (CME price in dollars converted to Reals) is very close to but opposite to the change in the value of the currency. It's kind of like saying that "value" of soybeans remains roughly the same. It also implies that the size of the soybean harvest in Brazil strongly influences the world price. I suppose it is possible that the price of one single commodity controls the value of a nation currency but Brazil produces much more than just soybeans.
The other thing that troubles me is the fact that Goldman Sachs the major source of information in this article is a very large international bank with it own currency trading division and writer of these derivative products. The question naturally arises is Goldman Sachs big enough to be able to influence the currency exchange values (maybe in collaboration with other big banks)? As we discovered in the last meltdown there was a great deal going on behind the scenes not obvious on the surface. |
Brazil Getting Real on Currency
