Investor Report Brazil: Pendulum swings

Sep 1, 2012

Currency volatility and exchange rate protectionism are taking their toll on Brazil’s corporates

By Thierry Ogier

In the 13 years since it was first floated, Brazil’s currency has gone through repeated cycles of depreciation followed by sharp rebounds.

The wild swings in the real have claimed several corporate casualties on the way – especially in the aftermath of the global financial crisis in 2008.

But this time is different, say Brazilian company executives.

After a long period of appreciation which hurt Brazilian industry, the real lost ground in the second quarter of the year against the dollar and other currencies. Local multinationals, such as Petrobras and Vale, have started to feel the pinch as much of their debt is denominated in foreign currencies.

Oil and gas company Queiroz Galvão Exploração e Produção (QGEP), recently admitted that it was concerned by the impact of the...

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