Essay: Global Economic Scenario 2003-2007
If one was to analyze the period between 2003 till 2007, the global economic scenario was pretty favorable and hence, the floating exchange rate as indicated by the graph also represents such rates which are steady and favorable for the economy. If one was to monitor the behavior of the exchange rates more closely, what comes across is the fact that the floating BRL has averaged 2.34 $ against the USD, within a range of 1.32 $ on the outer side of it, to the value of 3.96$ in the year of 2002.
Hence, if we were to closely examine the graph in greater detail what comes across is an astounding discovery that the nominal exchange rate’s value is quite close to the value of the 10-year average figure. Added to that is the fact that the ten year value has also vacillated to a great extent as a result of the huge changes in basic fundamentals such as the terms of trade, risk aversion and the underlying capital flows.