For monetary policy makers, the current context of sudden movements in financial markets represents without a doubt a great challenge since monetary policy of handling of interest rates is not sufficient to check the stability of the markets and driving behaviour of both inflation and economic growth. Without a doubt, the return of investors in emerging economies must follow with attention by Governments to avoid they become a threat to the stability of the economies. Returning to the case of Brazil, the return of investors is being reflected in the evolution of the real which has been appreciating in recent times and currently is close to breaking the floor of two units per dollar, a level not seen since October 2008 (currently the dollar in Brazil quoted 2.06 reais). Exchange rate appreciation may further affect the external accounts of Brazil who have been severely affected by the crisis, which keeps frightened Brazilian industrialists who still fail to overcome depressive situation which are going through. This threat on the exchange rate is not only latent in Brazil, but also in the rest of Latin American economies. To not be pessimistic, I think that it is valid to rescue the positive aspect that has the return of capital to the emerging economies in general and Latin American economies in particular.
It is the return of capital to the emerging economies represents not only a signal of recovery of investor appetite for risk, but is also a sign of confidence in these economies. This confidence in emerging economies has solid foundations. It is worth remembering that the current international financial crisis did not originate in the emerging world. Far from it, good part of economies in developing watched strong and sustained economic growth that was supporting the development of economies. In the case of economies latinoamericanas, except in the cases of Argentina, Venezuela and Ecuador, broadly came to apply solid and consistent economic policies with long-term growth. The crisis stopped the growth rate that came watching but not slowed the prospects of long-term growth, so that in them there are great opportunities of investment for when you resume the path of local and global growth. I think at the moment in economies such as Brazil, Peru and Colombia, economies with big perspectives in the not too distant future, which before the crisis exhibited many projects to strengthen long-term growth and to prepare for the same. These (infrastructure projects, investment in energy sources, in strategic economic sectors, among others), in no way have been abandoned, but have remained in force and will speed up as soon as the economic situation improves. Without a doubt, economies with major investment projects, represent one environment that attractive for investors who seek profitability. May exploit these economies, the return of investors to enhance their economic development? Original author and source of the article.