With the real appreciated, the dollar gives way to other currencies in exchange offices in Brazil

While the dollar continues to appreciate against the real —Brazil’s currency depreciated 1.24% against the American currency in the first half of this year—, Brazilian money gained strength against that of other countries in the same period.

This appreciation of the real against other currencies is due to factors such as the high interest rate, which attracts more foreign investment to the country, and the parity of the dollar and the euro, which strengthened the real against the European currency, according to experts consulted by the CNN .

According to a survey by Travelex Confidence, one of the largest exchange houses in the world, this movement contributed to Brazilians buying more euros and less traded currencies, such as the pound sterling, the Canadian and Australian dollars and the Mexican, Argentine and Chilean pesos.

“We noticed that the dollar’s share in the amount of paper money sold fell, while the euro and other currencies registered an increase”, says Marcos Weigt, head of treasury at Travelex.

The real appreciated 7.55% against the euro, 9.67% against the pound and reached an increase of 13.75% and 17.43% in comparison with the Chilean and Argentine pesos, respectively. The rise caused demand for the euro to increase by 1,100% in the first half of 2022 compared with the same period in 2021, as well as boosting the share of sales of less traded currencies on exchanges, which jumped from 11.8 % of the total at the beginning of the year to 13.8% in July.

Among the factors that explain the positive scenario of the real exchange rate and the consequent increase in demand against some currencies, the economist and MBA professor at Fundação Getúlio Vargas (FGV), Carla Beni, highlights the phenomenon of the euro’s parity with the dollar. , which happened for the first time in 20 years:

“With the parity, the real gained strength against the euro and lost strength against the dollar. As people were able to travel with the opening of borders, they took advantage of the moment when the currency of Europe became interesting, as well as the other currencies of South America”, explains the economist.

In the last month, searches for travel to countries in Europe, Chile and Argentina surpassed searches for tourism in the United States, according to the Google Trends platform. The executive president of the Brazilian Exchange Association (Abracam), Kelly Massaro, highlights the change of destination in the sector caused by the different prices:

“People are analyzing travel and end up opting for countries where the Brazilian currency is favored better. Today, we are experiencing very good demand for the pound sterling – the official currency of the United Kingdom -, the Australian dollar and even the Argentine peso – which suffers from the so-called ‘blue dollar’”, says Massaro.

Another factor pointed out by the economist at FGV and the head of Travelex Confidence is the high interest rate in Brazil. With the Selic rate at 13.25%, the country maintained its leadership in the ranking of the highest real interest rates in the world. The number ends up changing the country’s exchange rate scenario, and favors the inflow of foreign capital to take advantage of the rate, according to Beni and Weigt’s explanations.

Expectations for the second half

Despite the optimism, the international recession picture drawn in developed countries points to a different scenario in the second half of 2022, according to Carla Beni. She says that from the perspective of tourism, which drove the movement of exchange offices, the expectation is not mirrored in the result of the first six months of the year:

“We expect a cooling off. When you have a slowdown from developed economies, you don’t expect such high demand or tourism movement,” she explains. “We also don’t place high hopes on the local economy because we have elections in the middle of the road, which causes the scenario to fluctuate a lot”, adds the economist.

* Under supervision of Helena Vieira