Brazil

Brazil

From the 1970s onwards, government spending and service of the public debt

were the reasons for high inflation, and the subsequent rise in prices. Inflation

was Brazil's greatest monetary problem until President

Exchange rates: Brazil

reals (R$) per US$1

Jan 2001 1.954

2000 1.830

1999 1.815

1998 1.161

1997 1.078

1996 1.005

Note: From October 1994 through January 14, 1999, the official rate was

determined by a managed float; since January 15, 1999, the official rate

floats independently with respect to the US dollar.

SOURCE: CIA World Factbook 2001 [ONLINE].

Fernando Henrique Cardoso in the mid-1990s adopted measures to slow down

government spending and renegotiate public debt in order to contend with

inflationary pressures. Brazil's currency was constantly devalued against

the U.S. dollar. Currency devaluations generated incentives for the export

market, decreasing the trade imbalance caused by debt payments and excess

imports of manufactured goods. Devaluation helped the export market, wh

ich

expanded its production when exports were given a price advantage provided by

cheaper products in the world markets, but also represented a burden for domestic

consumers who faced higher prices on imported goods. In the period from 1995 to 2000,

the real devalued by approximately 100 percent. In 1995, 1 U.S. dollar was equal to 0.9176

reals. In 2000, 1 U.S. dollar was equal to 1.8302 reals. The devaluation was largely felt in

early 1999, when the central bank of Brazil adopted a floating exchange rate system. The real

then fell by 56 percent from 1998 to 1999.

In the past, Brazil had as many as 9 regional stock exchanges. However, with consolidations of

the stock markets in the early 1990s and the advent of electronic trading, all securities

transactions in Brazil are carried out in São Paulo, at the São Paulo Stock Exchange (BOVESPA).

There are approximately 1,100 companies listed on the São Paulo exchange. The total market

valuation of all listed companies on the São Paulo Exchange was US$228.6 billion in February 2001.

Daily transactions are published in the leading newspapers and are available on the Internet.

BOVESPA is part of the leading technology exchanges, offering electronic and after-hours trading

options. The Rio de Janeiro Stock Exchange is the oldest financial institution in the country,

founded in 1845. The Rio de Janeiro exchange is responsible for all the transactions in government

bonds. Futures transactions are carried out at the Mercantile Futures Exchange (BM&F). Located in

São Paulo, the BM&F has been operating since 1986 and is used mainly by coffee, beef, and cattle

producers and buyers.

GDP per Capita (US$)

Country 1975 1980 1985 1990 1998

Brazil 3,464 4,253 4,039 4,078 4,509

United States 19,364 21,529 23,200 25,363 29,683

Argentina 7,317 7,793 6,354 5,782 8,475

Colombia 1,612 1,868 1,875 2,119 2,392

SOURCE: United Nations. Human Development Report 2000; Trends in human development and per

capita income.