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MULTINATIONAL FINANCE

Case 2 : Brazil Fights a Real Battle

Group 2 :

ADHAM NURJATI

FATMA HAULIDA RAHMAH

MARIA FRANCISCA OKTAVIANI

MAGISTER MANAJEMEN

FAKULTAS EKONOMIKA DAN BISNIS

UNIVERSITAS GADJAH MADA

2017

but the inflation rate was very low. Cardozo was elected as a president in 1994 and made a real pan to stabillize the currency. Hyperinflation made Brazil society more likely to import than export. In October 1997 inflation rate of Brazil was 7% per year. Real plan succeded reducing the inflation rate in Brazil. investors assume that government policies in Brazil about the currency made that over value in Brazil and investors left Brazil which is reflected from the revocation of $ 10 billion in two weeks by investors. President Cardozo managed to raise BOLZA ( capital market in Brazil) by 158% since 1994. In addition. that impact the economic in Brazil. Seeing the phenomenon that the Brazilian government increased interest rates to 43% to reduce imports. Brazil inflation rate was high. there was a crisis economic in Asia. Cardozo introduced the "Real Plan" in 1993 while he was a finance minister. nearly 50% per month.Key Issues In 1994. and investors did not interest to investing. Brazil's condition had a current account deficit whereby Brazil imports more than exports. . that condition made Brazilian economy almost collapse. Real plan managed to stop hyperinflation and attract investors to invest. In the same year.