A number of economic indicators, including currency and stock market futures contracts, gave different signals as traders awaited Petroleo Brasileiro’s sale of shares worth approximately $25 billion next week. The state-run oil company, more commonly known as Petrobras, is planning what Bloomberg says is the biggest share sale in the Western Hemisphere in at least a decade.
The Brazilian currency, the real, rose throughout the week but fell slightly on Friday as traders anticipated the central bank of Brazil would raise interest rates to stave off potential inflation.
Fears of currency inflation hold particular weight in Brazil, which endured wild swings in the value of its currency after emerging from military rule in the 1980’s. The rate of inflation soared past 1,000 percent at times, and the currency was repeatedly devalued and manipulated in efforts to tame the economy.
Eventually, the so-called plano real restored economic order by creating a new currency called the ‘real’, and Brazil grew rapidly over the past 15 years on the strength of its petroleum, manufacturing and agricultural exports.
However, Brazil’s economic future is closely tied to those of major commodities and energy consumers like China and the United States, and many fear that without sustained Chinese growth, Brazil’s domestic demand will not be enough to keep the country’s economy on an even keel.
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