Brazil has seen tumultuous times in the last year. The country is facing a deep recession, downgrades from rating agencies, bleak unemployment rates, a huge fiscal deficit, and political unrest. Yet, in recent weeks, the real has appeared to be on an upward swing. There are a few contributing factors, but political turmoil seems to be the biggest component to the currency’s rise.
Even though, we have seen in the past years the weakening of the Aussie Dollar, this is due to various factors some being related to their industrial production for export and domestic use which has diminished in the past few years.
Economists are watching closely to see how China will address the devaluation of the country’s currency as any action taken could have global repercussions.
2016 has started with nervousness, uncertainty, and a very volatile market due among other reasons to the decline in commodities. Currencies are not the exception and are also affected by the economics politics.
Despite reassuring messages from Chinas Central Bank, some Hedge funds are making big bets against the currency of the country, which is suffering a slowdown in its economy and capital outflows.
