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The Brazilian experience in managing interest-exchange rate nexus

Author

Listed:
  • Ricardo Carneiro
  • Pedro Rossi

Abstract

This paper addresses four main questions: firstly, it discusses some theoretical background related to the interest-exchange rate nexus; secondly, it makes an attempt to explain why the interest rate in Brazil is so high, examining briefly the main explanations for it; thirdly, it describes Brazil’s foreign exchange markets, their size and hierarchy; and lastly, it explains the carry trade dynamics considering the institutionalism of the Brazilian foreign exchange market and also the government policies envisioned to curb it.

Suggested Citation

  • Ricardo Carneiro & Pedro Rossi, 2013. "The Brazilian experience in managing interest-exchange rate nexus," Competence Centre on Money, Trade, Finance and Development 1302, Hochschule fuer Technik und Wirtschaft, Berlin.
  • Handle: RePEc:mtf:wpaper:1302
    as

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    File URL: http://finance-and-trade.htw-berlin.de/fileadmin/HTW/Forschung/Money_Finance_Trade_Development/working_paper_series/wp_02_2013_Carneiro_Rossi_Interest_exchange_Rate_nexus.pdf
    File Function: First version, 2013
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    References listed on IDEAS

    as
    1. Dubravko Mihaljek & Frank Packer, 2010. "Derivatives in emerging markets," BIS Quarterly Review, Bank for International Settlements, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    working paper; daadpartnership; finance-and-trade;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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