The Embraer's decision in the early 2000s to try to hedge against further appreciation was not the

best decision for the company. The mid-2000s depreciation of the Brazilian real did not favour

Embraer's decision to hedge against further appreciation of the Brazilian real. When converted

into real terms, an increase in the real value of the Brazilian real against the US dollar would

increase Embraer's dollar revenues. The 2008 depreciation of the Brazilian real against the US

dollar worked against Embraer's expectations, resulting in a loss of 121 million dollars. This

would have saved Embraer from incurring a massive loss as a result of the real's failure to

appreciate as expected due to the effects of inflation in the Brazilian economy.