Real is the third South American currency with the biggest drop against the dollar

According to a survey carried out by financial consultancy L4 Capital, the Brazilian real had the third biggest drop in the last 10 years in relation to the US dollar. During this period, the Brazilian currency lost 54% of its value. Worse than the real are only the Argentine peso, with a devaluation of 98.3%, and the Uruguayan peso, with a drop of 70.2% against the dollar.

To give you an idea, in September 2013, one dollar cost around R$2.30. Today, the price of the American currency has more than doubled and you have to pay almost R$5 to buy the same dollar.

In Argentina, the devaluation of the currency is a reflection of the economic crisis deepened by measures adopted by socialist governments. Uruguay faces serious inflation problems.

In fourth place in the ranking comes Colombia, with a drop of 51.8% in the same period; Chile, with 43.5% devaluation; Paraguay, which shows a drop of 38.7%; and Peru, with a drop of 25.2%. Bolivia and Ecuador did not have data analyzed. Venezuela was left out of the ranking because it changed currency in the last 10 years.

According to the author of the survey, L4 Capital partner Felipe Pontes, in the last decade the Brazilian currency suffered two shocks: the 2015-2016 crisis and the health crisis caused by Covid-19.

The drop in Gross Domestic Product (GDP) recorded in 2015 and 2016 was, respectively, 3.8% and 3.6%. This sequence of decline in two consecutive years had only occurred in Brazil in 1930 and 1931, when GDP fell by 2.1% and 3.3%, respectively.

“This hurt the real because investors don’t like economic uncertainty,” said Felipe Pontes, explaining that the devaluation of the Brazilian currency leads to an increase in demand for the dollar, as the United States is known for its stability.