And in dollar terms, given the loss of productivity suffered by the Brazilian economy given substantial appreciation in their currency, unit labor costs have grown by 110% since 2005. (Read No Credit Bubble In Brazil, Just Dangerous Consumer Debt Burden).
Barclays recommended in a note to clients late Wednesday that they should anticipate further appreciation in the Brazilian currency, the real, with a target of BRL1.50 over the next three months.
With the central bank steadfastly holding the benchmark Selic rate at 7.25 percent, it seems policymakers have turned to currency appreciation in order to try to guide inflationary expectations down after the recent mid-month January inflation read out of of 6 percent, a 12 month high.
These developing countries often intervene in currency markets to prevent currency appreciation and its negative effects on their balance of trade resulting from currency depreciation and manipulation in other countries.
While the Indian central bank is not seen as likely to intervene to stem any appreciation in the rupee, the currency has also been popular this month due to a reform package from the Indian government aimed at stimulating the economy.
Japan and Switzerland have both gotten involved in currency markets over the past two days, stepping in to prevent outsized appreciation in the yen and the Swiss franc.
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Analysts said SAFE's move likely reflected the Chinese government's concerns over the yuan's rapid appreciation in recent weeks, but noted that the currency remains one of the bright spots among emerging markets.
In New Zealand, the head of the central bank said the bank has intervened in currency markets to slow the appreciation of its currency, but admitted there was only so much it could do.
WSJ: Asian Governments Take Measures to Battle Strong Currencies
In nearby New Zealand, the head of the central bank said the bank has intervened in currency markets to slow the appreciation of its currency, but admitted there was only so much it could do.
WSJ: Asian Governments Take Measures to Battle Strong Currencies
For the buyers, obtaining a higher interest rate than is available from bank deposits, as well as the ability to purchase a yuan-denominated security and to benefit from the appreciation of the Chinese currency that many expect in the coming years are the main attractions of dim sum bonds.
The problem in Brazil is not so much currency appreciation, but how its consumption based economic model interacts with a strong currency, says Tony Volpon, head of Latin America research at Nomura in New York.
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After a welcome appreciation alongside a stronger dollar in 2008, China's currency has fallen on a trade-weighted basis in recent weeks as the dollar has tumbled.
That growth often leads to government stability, currency strength and increased corporate profits, resulting in stock price appreciation and investment gains.
The recent sharp appreciation of the single currency did not "signal a serious overvaluation", Jens Weidmann argued in a speech that came at a time of rising fears the eurozone stands to lose most in a global currency war.
As long as there was uncertainty about the long-term value of the Swiss franc, speculators who thought the currency undervalued had an incentive to buy francs in order to profit from the appreciation, pushing the price up in the process.
The one country that most economists agree should let its currency rise is China (in theory, faster-growing countries should enjoy real appreciation over the long term).
The growing trend of multinationals shifting some of their product sourcing from China to other countries in Asia has been driven by a combination of rising labor costs, worker shortages, inflation, currency appreciation and changing policies.
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