The real cost of travelling to the World Cup

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Approximately 600,000 football fans have made their way to Brazil and at an estimated $2.5k spend per head ( according to govt sources) that’s $1.5 bln worth worth of Brazilian Real that has been/is being bought at a time when the central bank has also been intervening  to prop up the ailing currency and curb inflation.

The central bank has sold foreign-exchange swaps and dollar credit lines to support the real since August, when the currency fell to a five-year low of 2.4549 per USD. The central bank extended its $60 billion currency intervention programme this month after inflation accelerated to 6.37% in May, approaching the 6.5% top end of the country’s target .

The currency’s gains this year follow three straight years of losses when it plunged 33% versus the greenback. Fans from Europe will find the euro 6.6% weaker versus the real this year, British fans will also get less for their money after the pound fell 2.9% and the real has gained 5.5% against the USD, making everything from hotels to taxis to drinks more expensive for foreign visitors.

Brazilian reals really not cheap

Brazilian reals really not cheap

But six months from now, when the tournament is over, the real will be almost 7% cheaper at 2.4 to the greenback according to the median forecast of 28 strategists surveyed by Bloomberg.

More from them here

Did any of our readers out in Brazil get ahead of the curve to buy reals last year ? Do let us know, and do post up some anecdotes from your trip so far.

Author: Mike Paterson

Mike Paterson has more than 30 years of experience trading FX including as a senior trader with UBS and Credit Suisse. He was also head of FX at the State Bank of Victoria. With sizeable daily trading volumes Mike carved out a name in the market combining professional integrity with a cynical grasp of seizing market opportunity. Since leaving the City, Mike has been working as an independent consultant and trading along with presenting seminars and writing for a number of publications. Mike lives in Kent and supports Southend United FC.

3 Comments

  1. PS Here’s how to watch the games, free of all charges (for all you Americans out there): http://www.bloomberg.com/news/2014-06-13/how-to-watch-the-world-cup-in-the-u-s-for-free-legally.html

  2. There are rigid guidelines to buy/sell BRL and speculation is not on that list. You have to have a business related reason with accompanying docs in order to do so.

    That being said, every regulated ccy has a black mkt.

    You could do it with NDFs, but not sure those are avalable yet for retail mkt.

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