Improved Trade Balance in September: Effect of the Real Exchange Rate Still Small

BRAZIL ECONOMICS - Report 07 Oct 2013 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore
Brazil’s trade balance in September was in surplus by US$ 2.1 billion, indicating recovery. On a seasonally adjusted basis, the annualized surplus of US$ 16.4 billion is the largest since the end of last year (Graph 1). However, this result cannot be attributed to the weaker real exchange rate. Graph 1 Trade Balance Since the end of 2012, the real exchange rate with respect to the basket of currencies has depreciated by around 10%. A weaker real exchange rate encourages exports and inhibits imports, but the effects don’t take place in the short run. While the long-term elasticities of expor...

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