The US currency has taken the sleep not only of Brazilians but of the rest of the world as well. In addition to the coronavirus pandemic, Brazil faces political turmoil. The way in which political leaders are facing the pandemic has led to the devaluation of the national currency and the appreciation of the foreign currency, with the dollar reaching over 6 reais. Foreign investors, who previously believed in Brazil’s potential, are now wary due to the troubling scenario.
Do you want to know more about the rise in the dollar and the devaluation of the real? Keep reading this article and check the answers to this and the other pertinent questions!
What is the opinion of economists about the dollar above 6 reais?
In 2018, Brazil was experiencing a close war in the face of the presidential elections, and this turned out to be a major influence on the volatility of the American currency. You may be wondering, but what does that mean? Basically, the United States competed commercially with Europe and China and, according to economists, there was still room for the dollar to appreciate.
The estimate was that, at some point, the currency could be above the range of R $ 6.00. According to Bank of America, the estimate was that the dollar would surpass this mark and reach R $ 5.50 still in the middle of 2018.
The reason would be linked to the next candidate who would command the presidency of the Republic. If it were someone with little market experience, obviously, there would be doubts about governance, and that would further increase the value of the dollar.
Also according to Bank of America, at that time the real tended to fall along with the 2018 economy. This was because the exterior was still a crucial point when the subject was the devaluation of the Brazilian currency, and thus the fiscal stimulus would cause the USA to grow compared to the rest of the globe.
In 2020, the dollar started the year being quoted at R $ 4.02. In the last few days, after reaching a peak of R $ 5.97, the currency has already risen 40% in the year. The Financial Times believes that there are a number of factors that caused the devaluation of the Brazilian currency to happen. Among them are:
- the Covid-19 economic crisis ;
- the turmoil in domestic politics;
- cuts in the basic interest rate (Selic).
Very important investors point out that the country is at high political risk. In the past, these conflicts were accepted, since the Selic rate remained high, which made its applications yield more. However, with it currently down, investing in the Brazilian market is very risky and will not generate the desired profits.
What is the forecast for the dollar at the end of 2020?
At the end of this year, the expectation of the dollar is that the currency will reach values above R $ 6.00. Since the beginning of the year, the real has been the currency that has devalued the most and, according to the expectations of three major banks, the value of the dollar tends to rise even more. Among these banks are:
- Goldman Sachs;
It is worth remembering that even with high-interest rates stipulated by financial institutions, the dollar tends to surprise investors in the coming months. With the purchasing power adjusted, the value of the currency today would be around R $ 7.64.
Who benefits from the dollar above 6 reais?
As mentioned at the beginning of this article, the real is losing strength against the dollar, which allows investors to invest in dollarized assets, such as funds and companies that profit from the rise in the dollar. Therefore, investors only tend to profit from the appreciation of the American currency and the devaluation of the real.
Export companies also earn when the dollar rises, as they spend in reais and sell in dollars. Prices are more competitive abroad, thus considerably increasing the profit margin of these projects.
Who loses with the high dollar?
Importing companies are at a disadvantage as a result of the increase in the US currency. In other words, they pay in dollars and resell in real, harming their profits, just as this also negatively affects the consumer who receives the amount passed on. In addition, imported products end up being left aside, giving space to national materials. Those who intend to travel abroad, when the coronavirus pandemic ends, will also lose out, because the international credit card bill will increase in price, as will hotels, airline tickets and other services used abroad.
In short, the increase in foreign currency, especially the dollar, is a two-way street. There will be people losing, others winning, but it’s up to you to decide which side of the coin you want to be on.
With the rise in the dollar, which investments are safer?
The high dollar value can hinder the plans of many entrepreneurs, individuals or companies. However, this can also bring good earning opportunities for those who have set aside values to make investments.
There are countless ways in the market to profit from the appreciation of the foreign currency. Some are riskier, others more secure, just check which is the most profitable investment, with the lowest risk, and then close the deal. Among the options, see some below.
Foreign Exchange Funds
Foreign exchange funds are a great alternative, as the investment follows the variation of the currency. If the dollar increases, the values also rise. The dollar is the most common currency in this modality, and the application rate varies according to the institution chosen to invest.
In some cases, it is possible to invest at least R $ 500. This type of product is considered risky by some people, because the values fluctuate with the exchange rate.
Structured Operations Certificate
A great option in the high dollar is the COE (Structured Operations Certificate), an investment offered by banks that work with fixed and variable income products. The great advantage of this type of investment is that the investor has his capital invested insured.
Even if he has a loss, the amount invested will be returned in full. For this to be possible, it is necessary to check if the COE has protected capital, as some institutions do not offer such a guarantee. In such cases, if the bank goes bankrupt, the investor will not get his money back.
Future dollar investments are a way to profit from the appreciation of the US currency. However, it is worth remembering that this form of application is risky. The investor can choose whether to assume the position of buyer or seller of the currency futures contract.
Whoever takes the position of buyer wins with the dollar’s high and loses with the low. The one who chooses to be a seller wins with the fall and loses with the rise of the currency.
Anyway, with the economic scenario in which we live, it is possible that we will soon see the dollar above 6 reais. For this reason, it is necessary to evaluate very well the investment alternatives for the current moment and choose the most profitable one. An interesting decision is to turn to the national market, betting on real estate investment.
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