Brazil’s Real Opens Flat as Debates on Energy Supply Continues
By Luciana Magalhaes
The Brazilian real opened flat against the dollar on Wednesday as the market continues to debate the risk of energy rationing and the impact of government policies in the power sector which could lead to higher power prices in the future.
The real was trading at BRL2.0370 to the dollar, according Tullett Prebon via FactSect, after exiting active trading Tuesday at BRL2.0388.
There have been discussions about the risk of energy rationing in Brazil for the first time in many years as the hot and dry summer deprived hydroelectric dams of the water they need in a time when the heat is driving up power consumption in the country.
The summer in the Southern hemisphere is usually one of the wettest periods for Brazil, but this isn’t happening this year. The situation can be even more dramatic in the poorer regions of the country, where the lack of rain hurts crops.
In an attempt to reduce energy bills and spur growth last year, the Brazilian government forced many power generators to accept lower rates in return for extending generation concession, a strategy that raised concerns among investors.
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