By Brennan Stark, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The dollar gained 2.71 percent against a quickly weakening real Monday, leaving it with its largest appreciation since May 6th, 2010, when it rose 2.84 percent. The dollar is now the highest it has been against the real since July 21, 2010, when it reached R$1.784.
A continued environment of anxious risk aversion perpetuated by the Greek debt crisis, coupled with a slowdown in global markets and the Central Bank’s recent decision to lower interest rates in Brazil, is largely responsible for the real’s fall against the dollar, according to O Globo and Bloomberg.
The real has now lost twelve percent just this month, and its decline is steeper than any of the sixteen major currencies tracked by Bloomberg.
According to Latin America strategist at Banco BNP in São Paulo Diego Donadio, “The real is always seen as overvalued. Now you have global risk aversion and regulatory risks in Brazil. All together with expectations of sharp rate cuts, the real is the one to suffer the most.”
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