Brazil’s international reserves are falling: find out why!

Brazil’s international reserves ended September at $327.580 billion. This is the lowest level in 11 years and represents a reduction of $34.624 billion from 2021. Indeed, last year Brazil’s international reserves closed at $362.204 billion.

As we explained, this is the lowest level in more than ten years, more precisely since March 2011. So, for more on the subject, take a look below.

Understand why international reserves are falling

Thus, in March 2011, the level was 317.1 billion US dollars. This is the lowest level reached so far over this period. Compared to 2022, until October 14, Brazil’s international reserves had a total value of US$325.024 billion.

And why are the reserves so low? The head of the Central Bank’s statistics department, Fernando Rocha, explained the situation at a press conference. Basically, the main reason for the reduction is due to an increase in global interest, especially in the United States.

This is because the US central bank, the Fed, has applied a very tough monetary policy to fight the country’s inflation. The measure was applied in the same way as what is happening with Selic here in Brazil.

Thus, according to Rocha, this stricter position of the US Central Bank has two main consequences for Brazil’s international reserves.

The first is the variation in prices, due to the mark-to-market of securities available in the stock of reserves. The second is parity, because the appreciation of the dollar reduces the price of other currencies, such as the real.

Finally, in 2022, all this ended up contributing to the reduction of Brazilian reserves. This year alone there was $34.775 billion less. In addition, Central Bank interventions in the foreign exchange market also ended up contributing negatively in this regard. So far, this factor has generated a decrease of US$2.071 billion in our international reserves.

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