Exchange x Reserves: Whither Brazil? (Saraiva and Canuto)

“Vulnerability, Exchange Rate and International Reserves: Whither Brazil?“, by Bruno Saraiva and Otaviano Canuto, in Latin America EconoMonitor – RGE. “Picture a Latin American country sitting on US$ 350 billion of international reserves, while running current account deficit, fiscal deficit and paying on interest bill on public debt that hovers above 5% of GDP every year. Given the enormous opportunity costs of hoarding such chest of gold, how could that money ever be used outside a crisis situation, without unleashing the very currency appreciation that is disguisedly tried to curtail?” See: