The tango effect is being felt in the international bond
and currency markets and in the halls of the central bank in
Brasilia, but so far it has had relatively little effect on the
average Brazilian.
While Argentines switch their peso deposits to dollars and move
their dollar deposits out of the country, Brazilians remain
perfectly happy with their currency, the real. And since both
personal savings and personal credit (including mortgages) are
minuscule in Brazil, the central bank's rate increases have had
very little direct effect on individuals' finances.
So far, the tango effect has had an effect on individual
Brazilians generally only when they've travelled abroad, and found
everything much more expensive than it was six months ago. Brazil,
notwithstanding its stunning coastline, continues to run a tourism
deficit: maybe the recent depreciation of the real will be the
thing to finally bring...
