Real trouble

Article Abstract:

The Brazilian government may have to devalue the Brazilian real, and this could affect US exports to Brazil as well as earnings growth. The government plans to reduce spending and hold interest rates very high, but these policies will have a major impact on the economy and lead to high unemployment. An election is scheduled in Oct 1998, and interest rates could be reduced because of political pressures. A drop in interest rates is likely to lead to a drop in the value of the real.

Prices and rates, Economic policy, Brazil, Real (Brazil)

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How Emu might break up

Article Abstract:

European monetary union may be affected by a number of problems such as the continuation of national currencies between 1999 and the start of 2002 when the new coins and notes are issued. Usage of national currencies means that foreign exchange markets will persist. Investors may convert currencies in the belief that the currency they could could leave Emu. There have been no guarantees that exchange rates will be fixed from 1999 so there is no certainty about rates.

Western Europe, Monetary unions, Foreign exchange market

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