The Incredible Shrinking Dollar: U.S. Currency Continues Steep Decline vs. Brazilian Real

These are dark days for the dollar.

As the world's investors have continued to seek higher-yielding assets, the dollar has gotten pummeled.

One beneficiary of the dollar's slide has been the Brazilian currency, the Real. It's up an amazing 32% year-to-year vs. the greenback.

Today the Brazilian Real is trading under $1.72 against the U.S. dollar. In fact, the Real is the best-performer of the world’s 16 most-traded currencies in 2009.


The Brazilian economy and currency are both outperforming
their counterparts in the U.S.

For the casual traveler to Brazil, this may be nothing more than a curiosity. But it does greatly affect your buying power while in Brazil.

As a frequent visitor to Brazil, I've kept a close eye on the currency for the past nine years. The highest I've seen the currency pair trade was over BRL$4 to the dollar in 2001.

Current levels are getting close to 2007 lows for the dollar, around BRL$1.60.

Since the Real currency was only instituted in 1994, any further deterioration of the dollar could sink it to all-time lows against the Real.


This graphic shows the dollar's slide in just the past few months

G-7 leaders are increasingly concerned that a sliding dollar risks impeding their recoveries from the deepest global recession since World War II.

On the flip side, as developed economies struggle, the BRIC economies are heating up. China's latest quarter saw sizzling GDP growth of 7.9%.

And Brazil’s heavy investment inflows were bolstered by Banco Santander's recent IPO, which raised about USD$8.1 Billion, the largest in the world since March 2008.

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