Following the Asian currency crisis of 1997 and the Russian crisis of 1998, the Brazilian currency pegged to the US dollar is bound to be hit. 1999 1 month, Brazil had to abandon the previous pegged exchange rate system and adopt a floating exchange rate system. Shortly after the Russian crisis, Brazil was hit by the currency crisis. 1998 from August to September, the net outflow was about $25 billion. The outbreak of the currency crisis has touched people's worries. After entering June 5438+ 10, the Brazilian government announced a large-scale financial stability plan, and in June 5438+065438+ 10, it obtained an emergency loan of US$ 41500 million from an international financial institution centered on the International Monetary Fund. On the other hand, Brazil is required to implement fiscal austerity policies. However, because exchange rate stability can curb inflation, Brazil is required to maintain the exchange rate peg system as a condition for providing emergency loans.

However, the framework of Brazil's economic adjustment policy originally set by the International Monetary Fund is not to lower the exchange rate and implement fiscal austerity policy at the same time, but to adjust the economy only through fiscal austerity policy, which can not improve the domestic economic imbalance and external balance of payments imbalance and become an economic adjustment policy. If the exchange rate can't fall, a more severe economic austerity policy will be implemented, resulting in a more serious economic recession in Brazil from 65438 to 0999.

Political pressure against the fiscal stabilization plan has intensified in anticipation of a more serious recession. Congress rejected several items in the financial plan, and there was a heated debate during the deliberation. 1999 65438+ 10. On October 6th, Minas asked to postpone the repayment of about1500 million US dollars to the federal government on the grounds of lack of financial resources, which led to an increase in the market's distrust of the Brazilian government's fiscal austerity policy. Subsequently, on June 65438+1October 12, the central bank governor who supported the pegged exchange rate was removed from office, and the market experienced violent turmoil and the funds flowed out greatly. Although the Brazilian government has set a new pegged exchange rate on 13, it still cannot stop the outflow of funds. /kloc-on 0/5, the Brazilian central bank decided to abandon its intervention in the exchange rate and adopt a floating exchange rate system. As a result, it is estimated that199965438+1there will be a net outflow of about $5 billion from October 6 to Qiaotian. After adopting the floating exchange rate, the Brazilian real continued to depreciate, 1 October 29th, the Brazilian currency exchange rate broke through1USD =2 reais. In response to this situation, the Brazilian government and the International Monetary Fund reached an agreement to adopt a new policy of stabilizing the exchange rate, and announced its implementation on February 4. Since then, the real exchange rate has remained at the level of 1 USD = 1.9 reais.

In a sense, the devaluation of the real is the overvaluation of the exchange rate linked to the US dollar and the devaluation of the real caused by market pressure. This is a reasonable adjustment, but there are various problems in the exchange rate decline.

First of all, there may be price increases. The devaluation of the real has made the Brazilian currency lose its function of restraining price increase and stabilizing prices, and the price increase of imported goods may lead to price increase.

Secondly, after the transition to the floating exchange rate system, the pillar of financial policy falls on the interest rate policy, but in order to tighten the economy, curb prices and promote the introduction of foreign capital, there must be a high interest rate policy. However, the high interest rate policy will also increase the interest burden of national debt and expand the fiscal deficit. Due to the high interest rate policy, Brazil's debt interest payment increased to 8% of GDP in 1998. Although the International Monetary Fund also requires Brazil to implement a high interest rate policy, the increase in debt interest payments and the economic recession have led to a decrease in tax revenue, which has become the main reason for the expansion of the fiscal deficit; On the other hand, despite the implementation of fiscal austerity policy, the fiscal deficit has not narrowed, and investors' investment confidence has not recovered. In order to avoid the expansion of the fiscal deficit, the Brazilian government quickly implemented a prudent fiscal balance policy and formulated new fiscal policy principles under the floating exchange rate system to end the imbalance of fiscal revenue and expenditure as soon as possible.

The impact of Brazil's currency crisis

1, Brazil's currency crisis has had a profound impact on neighboring countries. Let's discuss the trade friction between Argentina and Brazil and the dollarization of the currency, as well as the impact of the Brazilian currency crisis on the Argentine economy.

At present, nearly 30% of Argentina's export trade is exported to Brazil, and the devaluation of the Brazilian real has brought a serious blow to Argentina's export trade. In particular, the export of automobiles and their parts, petroleum products, medicines, agricultural products and other commodities to Brazil tends to drop sharply; On the other hand, due to the devaluation of the real, Brazil's exports of fiber fabrics, shoes and boots to Argentina tend to increase sharply. From 1999 to1-August, the import of shoes and boots increased by 66% (compared with the same period 1998), and the import of fiber fabrics increased by 38%. To this end, Argentina had to take appropriate trade restrictions, such as imposing a tax on the import of steel products in April 1999, limiting the import quantity of fiber fabrics in July, and obtaining an import license in advance for imported shoes and boots in August. Brazil strongly opposes these measures of Argentina, and on September 20th 1999 announced the cancellation of Argentina's commodity import preferences. The relationship between Brazil and Argentina was once tense around trade friction. By the end of September, the situation had improved, which had generally subsided with the agreement on trade restrictions. However, it is no exaggeration to say that the recovery of trade protectionism is still a major obstacle to the ongoing economic liberalization between Brazil and Argentina. To truly eliminate the danger of trade protectionism between the two countries, we must wait until the economies of the two countries recover.

2. 1999, the economies of many Latin American countries declined. Taking a series of currency crises as an opportunity, the overseas inflow decreased and the terms of trade deteriorated. Although Latin American countries have adopted high interest rate policies and fiscal austerity policies to restore their credit status in the international financial market, the net inflow of overseas funds in Latin America has decreased sharply from 65,438 to 0,998. According to the forecast of the International Monetary Fund, the inflow of overseas funds from 65438 to 0999 in emerging markets is expected to be only half of that from 65438 to 0997. 1On September 26th, 1999, Ecuador announced that it would stop paying interest on Brady's debt. Although this is the first country among 58 Latin American countries to announce that it will stop paying foreign debt interest, it will affect the inflow of overseas funds throughout Latin America. In the 1980s, Latin American countries relied heavily on overseas funds obtained through bank loans. Similarly, in the 1990s, with the rapid development of economic liberalization, although the forms of overseas capital inflows have diversified, including securities investment, direct capital investment, bond investment and other forms, its economic system relying on overseas funds has not changed. On the contrary, their economies have become more sensitive to the international financial market and international financial crisis, their dependence on overseas funds has further increased, and their economic systems have become more fragile.

Mexico financial crisis in 794.

From 1994 to 12 to 1995, there was a financial crisis in Mexico, the peso exchange rate plummeted and the stock price plummeted. This financial crisis shocked the whole world, with great harm and far-reaching influence.