On January 13, Brazil devalued its currency, the real, creating further turmoil in world financial markets. By January 22, the real had fallen 29% despite large expenditures of dollar reserves by Brazil’s central bank. It was unclear whether planned fiscal reforms would be sufficient to slow the currency’s fall, and reliance on further interest rate increases might not be credible given their probable negative effects on the Brazilian economy.
Suggested citation: "Brazil," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-02, pp. 19, 02.01.1999.