Low dollars are good for some, bad for others; see the impact on the economy

If the high dollar scares those who are considering going abroad and puts pressure on inflation due to the increase in the prices of imported products, the decline in the US currency, which has already depreciated by around 15% in real terms this year, can only provide this. be good to everyone, right? Not always.

heard by experts UOL He states that the decline in the dollar rate, compared to the real rate, has adversely affected some sectors of the economy, especially those that need to export products to make a profit.

“Overall, exporters lose as the dollar falls against the real,” says Paulo Dutra, professor of economics at Faap.

Buyers abroad continue to pay the same amount in dollars, but exporters earn less when the currency is converted into real money.

Profiters are importers for the opposite reason: they have to use less reals to pay for goods in dollars.

Soybean, mining, meat and paper loss

According to Bruna Marcelino, chief strategist at Necton Investimentos, the sectors most affected by the dollar’s decline are agricultural products such as soybean exporters; mining from ore producers; protein (companies selling meat and chicken); and pulp and paper producing companies.

However, according to Dutra, the economic conditions that cause the dollar to lose strength against the real may not last long.

“Looking at the issues that cause the dollar to depreciate at the moment, they do not show that the decline will be permanent. We see the increase in commodity demand as a positive factor due to the end of the pandemic. However, China” has returned with restrictions due to covid-19 cases. “With this shutdown of cities and the Chinese economy, demand drops and the economy cools.”

“There is also the expectation of an interest rate hike to control inflation in Europe and the USA. This should reduce growth,” he said.

Low dollar helps against inflation

The dollar’s downfall has many positive aspects. In addition to lowering the price of international travel for Brazilians, the recent appreciation of the real against the US currency could help Brazil slow inflation.

“Looking at the current conditions, the strengthening of the real against the dollar helped to reduce the inflationary effect.”

This is because imports are cheaper or because commodities such as oil are produced here and priced in dollars. If the real value gains, prices will rise less and inflation will be more controlled.

“This would be one of the biggest advantages of the real value appreciation in relation to the dollar right now: reducing the inflationary effect,” said Paulo Dutra.

In addition, companies that have suffered from the real decline in recent years can now gain strength.

“These are companies with raw material costs in dollars, such as those that need wheat to produce their products (cookies, noodles) and technology, electronics and appliances companies that need imported components,” said Bruna Marcelino.

According to the Chief Economist, companies with dollar-denominated debt can also benefit from the rise in real terms.

“The point to note is companies that have high dollar-denominated debt and therefore benefit from the decline in foreign exchange, because this reduces indebtedness.”