High interest rates and appreciation of the products exported by Brazil increased the influx of foreign investment into the country. One of the effects of this is Decrease in the price of the dollar. a National Magazine Economists asked how Brazil could make better use of this resource-flow moment.
On the stock market screen, International investor eyes on Brazil. According to a survey conducted by a consulting firm, Interest in the country has risen this year. To give you an idea, from 2018 to 2020, the country had an outflow of foreign investment from the stock market.
In 2021, money started flowing again, and in the first three months of 2022, R$83.5 billion of foreign investment has already entered: much more money than the whole of last year..
Among the major emerging exchanges, this year the Brazilian was the highest gainer. The performance of the Ibovespa It was also better than the New York Stock Exchange and European stock exchanges like Germany and one Englandthat accumulate waterfalls.
One of the reasons why investors are interested in Brazil is that The country is a major exporter of raw materials such as iron ore, steel and soybeans – the so-called commodities. Because of the Russian invasion UkraineIts price has risen abroad. Another reason is high interest rateresulting in an increase in income within Brazil.
But that money that comes in is a short-term investment. Just as it gets in quickly, it can also leave the country quickly and seek profitability elsewhere. According to economists I interviewed National MagazineAnd the Now is the time to take advantage of this influx of dollars to take actions that boost our economy.
Former Central Bank Director Luis Fernando Figueiredo thinks Brazil should do it Strengthening commitment to the integrity of public accountswith the so-called fiscal policy, to maintain this investment in the long term.
“Brazil has very high debt and every year it continues to run into deficit. So people fear whether this debt can be repaid or whether it will be carried over. When a country has a very large debt, they are afraid to invest in that country. It is like us back home. : If we spend a lot more than we earn, our savings disappear, we go into debt, and at some point, we go bankrupt. So, this is the environment that Brazil has to avoid,” warns partner at Mauá Capital.
Economist Paulo Nogueira Batista Jr says so Brazil can take advantage of the dollar’s decline to boost international reserves.
Brazil today has a strong international position in terms of reserves, unlike Argentina or Turkey, which are two emerging countries with low reserves and prone to speculative attacks. Argentina had to turn to the IMF, and Brazil did not. Brazil retains some autonomy. Since the world is so dangerous, we have seen the epidemic and now the war in it UkraineHe points out that it is wise to build up more reserves if there is room for that.
Former Central Bank President Gustavo Loyola says that too It is important to show the consistency of investors in managing the economy.
“I would basically say don’t get in the way of uncertainty, create political uncertainty, create uncertainty in the financial issue, you know? So, maintaining a coherent, consistent and responsible economic policy. And he stresses that this is essential.”