Editorial RIO DE JANEIRO, BRAZIL – This last week the U.S. dollar sank against the Brazilian real to its lowest point in recent memory, it was R$1.55 to US$1. That, plus the firestorm inflation and real estate gold-rush, puts living in Rio out of reach for many foreigners. The only expatriates able to afford living in the posh areas of Zona Sul (South Zone) like Ipanema, Leblon or the Lagoa are those either working for multinationals, the government, or who have been here since before the boom to insulate themselves against the living costs. Stone Korshak, Editor and Publisher of The Rio Times. For those thinking about moving to Rio to take advantage of the business opportunities and the mythically high-paying executive jobs, something you have to understand is – it is more expensive than New York at the moment. An average meal in Ipanema, at an average restaurant is at least R$30 per person, with our new exchange rate, that is US$20… for an average meal. It is normal to spend R$50 for a pizza here, imagine paying US$32 for a pizza in New York, or anywhere. For apartments, the average one-bedroom apartment in Ipanema is listed as R$2,600 per month, plus condo fees and taxes and renters insurance (equal to three months of rent paid up-front) – amortized it will be R$3,200 per month (US$2,000). A small studio apartment will be R$2,100, or R$2,600 per month really – that is basically US$1,600. Now I may be dating myself – but that sounds like the price of a studio in SoHo or the West Village. So for those looking to come to Brazil with money from back home, prepare to feel the burn, If the U.S. dollar were stronger, back at R$2.5 to US$1, of course that R$3,200 per month one-bedroom apartment would be US$1,200… ah, wouldn’t that be nice. The unfortunate reality for expatriates with assets from outside Brazil is, it’s hard to find an economist around to hypothesize a scenario where the Brazilian real loses value against the dollar in the next five years. So, what can you do? Business. Oil Business, and all the services that go along with it. Rio de Janeiro just had a victory in negotiating a royalty distribution plan allowing proceeds to stay in the southeast oil producing states (like Rio). And of course the 2014 World Cup and 2016 Olympics will bring business in drastic spikes as well. Current estimates put the oil proceeds at R$7.9 billion per year, about the same as current agribusiness, and BNDES (the national bank) lent disbursements totaling over R$178 billion last year. Of course not to you, but to someone who might do business with you. But, to do business in Brazil, Portuguese is a requirement, and so is a big investment in legal fees to operate, so do your homework before jumping in. Since 2004 the Brazilian Real against the U.S. Dollar, image by Google Finance, July 7, 2011. One Response to "The Big Real" Pingback: Adventures | The Rio Times Leave a Reply Cancel Reply Your email address will not be published.