Global Value Investing

[Drexion2004]

It depends what you want to buy. Cars or electronics? Sure, blame the import taxes. Food though i'll happily buy in Brazil ;).

The Real exchange rate has been pretty stable in the 1.75-1.9 area since late September 2011. Thats 8 months of them lowering rates without any significant currency move (I'd argue a 10% kind of fluctuation-range on the Real is normal in a 8 month period). Heck in the beginning of March the rate was at 1.7x and the Selix had already lowered rates significantly by then.

We are now at historically low SELIX rate levels. What makes you think the 'bit left to go lower' in those rates will have a larger impact than the 4% rate-lowering Brazil has already undergone (Most of that in that 8 month period I mentioned above)? By your logic, when the SELIX stops lowering rates that should provide a boost to the Real -- How long before the SELIX reaches a bottom? I don't see them going that much lower, heck inflation rates were still at 5.25% in April 2012!

http://www.reuters.com/article/2012/04/24/us-brazil-economy-inflation-idUSBRE83N0MZ20120424

On a separate note, my fixed income investments in Brazil have been ROCKING the past 8 months (laugh). Gotta love buying in at 12.5% yields and then getting rate decrease-gains on top of that.

-Fernando