Exchange-rate management in Brazil

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Exchange-rate management in Brazil

  • Autor:

    Autor:

    Prates, Daniela Magalhães -
    Cunha, André Moreira -
    Lélis, Marcos Tadeo Caputi -

  • Descripción física: páginas. 95-115
  • Símbolo ONU (Firma): LC/G.2418-P
  • Fecha: Diciembre 1, 2009

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Descripción

Abstract:

This paper examines four hypotheses: (i); in Brazil, as in otherperipheral countries in the post-crisis context, a policy choice appears tohave been made for a flexible exchange rate within a currency band ("dirtyfloat");; (ii); the underlying reasons for this policy appear to have more to dowith pass-through of exchange-rate variations and precautionary demandfor reserves than with the maintenance of a competitive real exchangerate; (iii); in the country's peculiar situation, considerable capital mobility isconjoined with large and liquid financial derivatives markets and a reservesbuild-up policy that carries a high fiscal cost; (iv); until April 2006, reservesaccumulated in much the same way under the floating exchange-ratesystem as they had under the currency band regime; there have beenchanges since then owing to the rapid growth of reserves.