São Paulo – The appreciation of the U.S. dollar should not favour Brazilian exports. Each dollar was sold for around R$ 2 in early May, but the exchange rate closed at R$ 2.12 on Thursday (06), in a change, however, that is not enough to promote foreign sales, particularly of manufactured goods, which are suffering due to the lack of competitiveness in the international market. "It is not enough to grant competitiveness to manufactured products. The exchange rate would have to be at around R$ 2.35 [for every US dollar]," said the president at the Brazilian Foreign Trade Association (AEB), José Augusto de Castro.
The AEB president believes that the trend is for the U.S. currency to slide back to the R$ 2 level. For exporters, he explains, it is not feasible to reduce product prices and to gain market betting on a more appreciated dollar. "How can they be sure [that the dollar will remain appreciated]? If the exchange rate drops to R$ 2 or R$ 2.05, they will run a loss," said Castro. The expert is, however, referring to manufactured goods, which need greater competitiveness abroad. For commodities that already have favourable prices to foreign sales, any appreciation of the dollar means profitability gains.
Adriano Gomes, a consultant at Méthode Consultoria Empresarial and finance professor at the Higher School of Advertising and Marketing (ESPM), also believes that the current appreciation of the U.S. dollar will not benefit exports. "This is a moment of global recovery. The dollar has become more appreciated in Brazil, but it has also appreciated worldwide. Therefore, the effect is cancelled out," said the professor. According to him, had this change been focussed solely on Brazil, it could benefit foreign sales.
Gomes recalls that the appreciated dollar brings inflationary pressure, mainly due to fuel imports, which is concerning to Brazil. Also, the higher cost of raw materials, with the appreciated U.S. currency, ends up reflecting on prices of end products, making them more expensive in Brazil and, hence, generating inflation. But the consultant at Méthode adds that if the U.S. economy continues to grow, the tendency is for the dollar to continue appreciating.
Castro, in turn, believes that the appreciated dollar has no direct relation to liquidity in the United States. According to him, the situation actually reflects the reality of the Brazilian economy, with outflow of foreign currency and a significant current account deficit. The values are influenced by the Brazilian trade balance, with exports having fallen from US$ 97.8 billion from January to May 2012, to US$ 93.2 billion in the same period this year, and with imports having grown from US$ 91.6 billion to US$ 98.6 billion in the same comparison.
*Translated by Mark Ament
