Professional Documents
Culture Documents
Activity 3
Activity 3
from Embraer, as it was both good and bad for the company's financial performance. For the case
that Embraer suffered a significant revenue loss as a result of a 40% drop in the real value of the
Brazilian real against the US dollar in November 2008. This is due to the fact that the
depreciation of the real increased Embraer's revenues in real terms, but the company suffered a
loss of 121 million US dollars because it evaded by locking in a much higher real versus dollar
exchange rate. However, the decline in the Brazilian currency benefited Embraer, whose stock
price soared to its highest level since February 2008 on speculation that the decline in the real
would lead to an increase in Embraer's revenues when expressed in reals. This demonstrates that
the depreciation of the Brazilian real had a mixed impact on Embraer's revenues.