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dc.titleThe Correlation Effect between Commodity Prices and Exchange Rate for Brazilian Firms' Balance Sheets
dc.contributor.authorValle, Mauricio Ribeiro do
dc.contributor.authorToneto Junior, Rudinei
dc.contributor.authorVieira Cicogna, Maria Paula
dc.contributor.authorTarantin Junior, Wilson
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageBrazil
dc.date.available2017-01-23T00:00:00
dc.date.issue2017-01-19T00:00:00
dc.description.abstractThis paper shows that exchange rate depreciation has a negative effect on the balance sheet of Brazilian companies with foreign indebtedness; this effect stems mainly from the negative correlation between the exchange rate and international commodity prices. While the face value of liabilities increased in proportion to the exchange rate during the period studied, revenues from exporting companies did not increase in the same proportion, since most exporting companies in Brazil are commodity producers. Therefore, the hedge expected by exporting companies' receivables is less effective than expected. The paper also finds a negative relationship between debt by BNDES and the foreign currency debt; moreover, only total assets and total liabilities have significant effects on accessing BNDES debt. Brazil's high dependence on the production and export of commodities affects domestic companies' growth of domestic companies, suggesting that the correlation effect between exchange rate and international commodity prices must be considered when investigating companies' competitiveness.
dc.identifier.doihttp://dx.doi.org/10.18235/0000605
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/The-Correlation-Effect-between-Commodity-Prices-and-Exchange-Rate-for-Brazilian-Firms-Balance-Sheets.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectCommodity Export
dc.subjectFirm Performance
dc.subjectExchange Rate
dc.subjectInterest Rate
dc.subjectForeign Currency Debt
dc.subjectInvestment
dc.subjectExtractive Industry
dc.subjectExporting Firm
dc.subject.jelcodeF34 - International Lending and Debt Problems
dc.subject.jelcodeG10 - General Financial Markets: General
dc.subject.jelcodeG15 - International Financial Markets
dc.subject.keywordscommodity export;foreign currency debt;exporting firms
dc.typeTechnical Notes
idb.identifier.pubnumberTechnical Notes
idb.operationRG-K1198
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