A Real Problem: Brazil's Currency Depreciation and Inflation Essay examples

A Real Problem: Brazil's Currency Depreciation and Inflation Essay examples

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1. Introduction
A decade ago, an American’s experience in Brazil may have included a trip to a soccer game, a visit to see the statue of Christ the Redeemer, and a many cups of the country’s famous coffee. For those that could afford it, this seemed like a desirable vacation destination. Again, with the exchange rate in 2003 at 3.5 reais to the dollar, this was a vacation only for those that could afford it. One might assume that this high exchange rate comes with a high standard of living and a high value of money for Brazil’s own citizens. As my article states, this is not the case.
The current exchange rate is not as high as the 2003 figure – it currently sits at 2.3 reais to the dollar. In real terms, this is barely half of the 2003 rate, due to the high inflation in Brazil. Still, the economy of Brazil is in trouble. The article states that visitors to Brazil in recent years have learned about what the locals call the “custo Brasil” – the Brazil cost.
This term is representative of the high prices for everyday 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 burger in Brazil costs more than in countries with wealthier citizens, like Norway, Sweden, and Switzerland. Food should be cheaper to citizens in a country that has as much poverty as Brazil, but sadly that is not the case.
Furthermore, my article states that the wages of the citizens of Brazil are not nearly what they should be, despite a high minimum wage. “In countries where citizens are making livable wages, their money goes further.” Brazilians have little spending p...

... middle of paper ...

...ease, so does the price of the land. I know this may seem farfetched, especially in a country like Brazil, filled with slums and impoverished neighborhoods. It may be difficult to come across land that is worth buying, but investing in land and letting its value increase is better than allowing money to lose its purchasing power.
3. Conclusion
While the country has some serious problems to address regarding its currency, Brazil does have the tools to fix inflation. They have an agriculture sector that, if handled properly, can boost their economy’s production and create jobs for their citizens. More jobs would mean more money, and more money would lead to domestic consumption; now citizens could afford the pricy products sold in Brazil. If improvements are to be made to Brazil’s economy, they will come due to monetary policy tools being implemented in the country.

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