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Energy and the exchange rate in Brazil

Energy and the exchange rate in Brazil
rafael.herzberg@gmail.com

There is a convergence of opinion among economic/financial experts that interest rates in Brazil will continue to fall.

One of the attractions of global investors in Brazil has been for years the real remuneration higher than a list of other countries.

In this scenario it will be reasonable to assume that the Real (local currency) will continue to depreciate against hard currencies. In fact this phenomenon is already occurring!

Generation projects will be more expensive in Reais because most of them depend on imports. Fuel-dependent plants have their variable costs linked to the Dollar and will also have leveraged costs.

Bottom line: Energy should be more expensive in Brazil in Reals.

Rafael Herzberg's picture

Thank Rafael for the Post!

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