Conflict Between the Central Bank and Finance Ministry

BRAZIL ECONOMICS - Report 19 Aug 2013 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore
Last Friday the depreciation of the real accelerated, with the exchange rate approaching R$2.40/US$, which is the quotation attained at the height of the crisis in 2008 (Graph 1). Graph 1 Exchange Rate – daily data Winds from the United States contributed to this movement. The probability has been increasing that the Federal Reserve will start tapering back on its asset-buying in September, which has accentuated the trend for the dollar to appreciate in relation to a large number of other currencies. But neither this movement last Friday nor the tendency for the real to weaken in recent wee...

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