Good morning! How an unstable Brazilian currency hampers foreign investment. The government could change the structure of tax, money laundering authorities. Automakers abandoning Argentina for Brazil. Enjoy your read! (This newsletter is for platinum subscribers only. Become one now!)
How an unstable Brazilian currency hampers foreign investment
Over the past decade, Brazil has been capable of offering attractive infrastructure projects that lured foreign groups to the country. But one roadblock remains: the risk of the Brazilian currency. This is the potential for loss when an investor is exposed to foreign currency or foreign-currency-traded investments. Concession contracts, such as permissions to administer roadways funded mainly through toll fares, bring revenue in Brazilian Reais—but many infrastructure groups have debts in U.S. Dollars.
Why it matters. Brazil is urging for more infrastructure investment—but the government doesn’t have the money, and major Brazilian construction companies are still in crisis after Operation Car Wash. Making the Brazilian economy more integrated with the rest of the world could bring more foreign direct investment.
Solutions. The government’s Investment Partnership Program is studying three alternatives to reduce the risk of Brazil’s currency:
- Dollarization. A study by the World Economic Forum on infrastructure financing in Brazil suggests the...