Fiscal path will dictate the future of Brazil’s floating exchange rate

Fiscal path will dictate the future of Brazil's floating exchange rate

Twenty years ago, Brazil’s embattled economy was crawling back from a difficult period, right after a new election, dealing with the mistrust of investors and international turmoil involving emerging markets. Sounds familiar, right?

Although the current situation has many differences, the solutions being sought to boost Brazil’s economy once again closely refer to a structure fully adopted to stop the crisis: the so-called “macroeconomic tripod”. In January of 1999, its last pillar, a floating exchange rate, joined the inflation target regime and fiscal responsibility in an attempt to “stop the...

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