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Market view: Brazil feels the crunch
31 October 2008
Richard Bird, head of correspondent banking at Unibanco in Sao Paulo, and coordinator of the International Affairs sub-committee of the Brazilian Federation of Banks (Febraban), comments on the effects of the liquidity crisis on trade finance in Brazil.
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brazil credit crunch liquidity crisis trade finance
One might excuse some Brazilians for having embraced the de-coupling theory. After all, a tremendous amount of progress has been made over the last decade or more to sort out important macroeconomic issues. Inflation is down, growth is strong, unemployment is at a low and real wages are rising. Brazil is a low cost producer in many commodities and what seems like every other month, we hear of a Brazilian commodity company expanding abroad through acquisition. A look at their neighbours by comparison, with few exceptions, reinforces this perception. But now that the full blast of the liquidity shock wave has struck, what happens to trade finance?
It...
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