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  • Essay / A real problem: the depreciation of the Brazilian currency and...

    1. Introduction Ten years ago, an American's experience in Brazil might include a trip to see a soccer game, a visit to see the Christ the Redeemer statue, and many cups of the country's famous coffee. For those who could afford it, it seemed to be a popular vacation destination. Again, with an exchange rate of 3.5 reais to the dollar in 2003, these vacations were reserved for those who could afford them. One might assume that this high exchange rate comes with a high standard of living and high monetary value for Brazilian citizens. As my article says, this is not the case. The current exchange rate is not as high as it was in 2003 – it currently stands at 2.3 reais per dollar. In real terms, this is barely half the rate in 2003, due to high inflation in Brazil. Yet Brazil's economy is struggling. The article says visitors to Brazil in recent years have discovered what locals call “custo Brasil” – the cost of Brazil. This term is representative of the high prices of everyday consumer goods in the country. Cars, for example, cost “at least 50% more than in most other countries,” according to my article. The Economist uses a tool called the “Big Mac Index” to compare currencies around the world. According to the Big Mac Index, a hamburger costs more in Brazil than in countries with wealthier citizens, such as Norway, Sweden and Switzerland. Food should be cheaper for citizens of a country with as much poverty as Brazil, but unfortunately this is not the case. Furthermore, my article claims that the salaries of citizens of Brazil are far from what they should be, despite a high minimum. salary. “In countries where citizens earn decent salaries, their money goes further. » Brazilians have few expenses p...... middle of paper ......ease, the price of land too. I know this may seem far-fetched, especially in a country like Brazil, full of slums and poor neighborhoods. It can be difficult to find land worth buying, but it is better to invest in land and let its value increase than to let money lose its purchasing power.3. Conclusion Although the country has serious issues to resolve regarding its currency, Brazil has the tools necessary to address inflation. They have an agricultural sector which, if managed correctly, can boost production in their economy and create jobs for their citizens. More jobs would mean more money, and more money would lead to domestic consumption; citizens could now afford the expensive products sold in Brazil. If improvements are to be made to the Brazilian economy, they will come from the monetary policy tools implemented in the country..