Brazil Investment Receives Further Boost
Investment in Brazil recently received a boost with the issue of new banknotes. This is part of the push to make the Brazilian currency fully convertible, an event that will inevitably encourage further investment into Brazil.
With the Brazil stock exchange producing some of the best results globally and investment in Brazil currently booming, the country is seeing a vast inflow of funds. The Brazil real was one of the top performing currencies during 2009 and this has acted as a honeypot for capital inflows into Brazil via direct investment or equities.
However, Brazil's currency cannot be freely traded or fully converted into other currencies. Recognising that this is a slight obstacle in the way of outflow investment from Brazil, the Central Bank of Brazil is keen to bring the real into line with other freely traded international currencies. The new ‘family' of real banknotes is the first step in the process.
R$50 and R$100 banknotes were unveiled in a high-profile ceremony in Brazil. These highest denomination notes are first to be released into circulation. The Central Bank of Brazil will release other notes over the next two years with R$10 and R$20 notes due to be issued early next year and R$2 and R$5 will follow suit in early 2012.
The new bills in Brazil incorporate the latest security measures to guard against counterfeiting. These measures include high-quality watermarks and holographic material. The increased security of Brazil's notes brings them up to standards similar to those found in the world's most important currencies. High-tech anti-counterfeiting measures also add to the appeal of the currency in Brazil, making investing in Brazil more attractive.
Speaking at the presentation, Finance Minister Guido Mantega said the release of the new banknotes was in preparation for international circulation as "there is already demand for the real to be used outside Brazil".
Over the last five years, Brazil has gone from strength to strength. The stability of the economy characterised by controlled inflation, high annual growth forecasts for the near future and an increasingly-affluent middle class have all contributed to making Brazil one of the top investment destinations globally.
At Obelisk, we see the release of high-tech banknotes as yet another step along the road towards a fully developed economy. The bid to internationalise the currency in Brazil is also a welcome addition to the long list of reasons why one of the best bets at the moment is Brazilian real estate.
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