South American tourism industry hopes for boom from currency devaluation

A decade ago, Brazil probably seemed like a dream destination for many foreign tourists. As well as being home to picturesque beaches and decadent Carnival parties, the country was receiving positive press internationally for its economic progress and its growing global relevance, as it prepared to host the 2014 World Cup and 2016 Olympic Games.

But the trip would not have been a cheap one.

A tourist’s U.S. dollar would have fetched just two Brazilian reais ten years ago. Years of capital inflows into the then-booming emerging economy had helped bring prosperity for locals, but it also made the country expensive for foreign visitors.

With these inflows dwindling and safe-haven currencies gaining strength across the world, the picture is now a starkly different one. As of mid-August 2022, USD 1 is worth BRL 5.10 — a more than 150-percent difference from the 2012 exchange rate.

The 2020 pandemic crisis hit the Brazilian currency hard — the exchange rate, which had until then oscillated between USD 1: BRL 2 and USD 1: BRL 4, sank to USD 1: BRL 6 by June of that year. At the time, international travel restrictions hampered tourism.   

Now, as the worst of Covid appears to recede into the past, Brazil’s tourism industry is returning to normal — while the country’s currency remains weaker than...