IntroductionTrends of the Balance of PaymentBrazil's Balance of Payments has grown steadily over the last three years. The current account, which is used to measure imports and exports has tripled since 2004. In 2004 the current account balance was $3,520,000,000 (www.indexmundi.com). In 2005 the current account balance was $8,000,000,000, which is an increase of 127.27% (www.indexmundi.com). In 2006 the current account balance was $14,190,000,000, which is 77.38% (www.indexmundi.com). The capital account is on the rise for many reasons. Brazil is part of what Goldman Sachs calls the BRIC, which stands for Brazil, Russia, India, and China. It is predicted that the BRIC will be among the wealthiest nations in the world because of the exporting of raw materials (www.investopedia.com). Brazil continues to grow across the globe and because of their access to raw materials Brazil is viewed as an opportunity for foreign investment.
The capital account measures foreign investments and other portfolio investments.
The capital account for Brazil collects data from direct investments, portfolio investments, other investments, and reserve assets. In 2004 the capital account was more than the current account at around $8,000,000. In 2005 the capital account is still higher than the current account at $10,000,000. In 2006 the capital account is slightly above $10,000,000.
Exchange Rates"When India started liberalizing imports in 1991, the biggest worry was that its foreign exchange reserves would vanish in no time and it would perennially be at the mercy of the International Monetary Fund and the World Bank. Its reserves in 1991 were barely enough to cover 15 days of imports. Today, India's reserves have crossed $76 billion. Instead of depreciating, the rupee has gained about 4 per cent against the dollar over the past 12 months. India's current account balance of payments shows a surplus for the first time in 25...