The present report is an updating of the Feu (1999) report published in the 15º issue of this periodical. We estimate the exchange rate corresponding to a non-factors current account of services and goods – CCBSnf, of services and goods produced by market expectations as well as a balance that stabilizes the external liability/gross domestic product (GDP) ratio. For this purpose the exchange rate calculation method presented in Feu (1999) is updated and the Barros and Barbosa’s (2002) capital stock estimate is used.
behavior of the exchange rate, its volatility and its long term trend is a
constant concern when one intends to build scenarios. It is then necessary
to forecast possible exchange rate volatilities and its long term trend.
In the present study the attention is focused on the long term behavior of
the exchange rate to which the scenario would converge after a period of
it was tried to estimate the long term equilibrium exchange rate in the
past (from 1951 to 2001) and for the next years considering the negative
correlation between the exchange rate deviation and the CCBSnf as a
proportion of the GDP (in US$ of 2001) and data regarding the external and
internal inflations. Exchange rate deviation means how much the real
exchange rate is far removed from the equilibrium exchange rate that
corresponds to the exchange rate of the base year when the CCBSnf was
close to zero.
It is also shown the evolution of the external liability as well as its components (foreign capital stock invested in the country and external debt) and the fluxes it generates (factors services) in the period 1995/2001. Finally, the exchange rate and the external liability/GDP ratio were estimated, according to projections concerning commercial balance, current account, and internal and external inflation as well as according to the commercial balance necessary for stabilizing the external liability/GDP ratio in 2003.
The data and sources used in the present work were – in what concerns Brazil – a) those of the Instituto Brasileiro de Geografia e Estatística (IBGE) relative to gross domestic product in reais and dollars and the GDP implicit deflator (DI), published by IPEADATA of the Instituto de Pesquisa Econômica Aplicada (IPEA); b) balance of the current transactions, of the exports and imports of goods (FOB), of services (non-factors), of incomes – net and total concerning expenses – (also denominated factors services), as well as its subdivision in salary and wage, profits and dividends and interests, of variation of the national consumer’s price index (INPC), of the external debt (including inter-companies loans) supplied by the Brazilian Central Bank (BACEN) and c) foreign capital stock invested in the country calculated by Barros and Barbosa (2002). For the United States, the Consumer Price Index (IPC) and the Gross Price Index (IPA) series used were those available at BACEN while the DI values were those supplied by the Bureau of Economics Analysis.
The work is divided into four sections. Besides this brief introduction, Section 1 describes the methodology used for calculating the exchange rate for a non-factors current account of goods and services and the internal and external inflation forecast, Section 2 analyzes the Brazilian external liability, Section 3 verifies the sustainability of the liability, Section 4 makes estimates for the years 2002 and 2003 and finally, Section 5 concludes the report.
Graphic Edition/Edição Gráfica:
Tuesday, 11 November 2008.