The Launch of the FCD Currency World Cup

Today see’s the start of the much anticipated FIFA World Cup in Brazil and while the world focuses on the events on the pitch, we here at Foreign Currency Direct plc will be launching the currency world cup! Every day we will be picking one match and discussing the currencies of those countries as we explore some of the more exotic currencies as well as those more regularly traded currency pairs. Today the tournament starts with the hosts Brazil playing Croatia so today we will be examining the Brazilian Real and the Croatian Kuna.

Brazilian Real (BRL)

The Brazilian Real was introduced into the economy in 1994 replacing the old currency the Cruzeiro as a method of halting the 30 year rising inflation levels. When the Real was introduced it was valued at exactly 1BRL to 1 USD however by 2002 it had devalued to almost 4BRL to 1USD although now the exchange rate is against the US Dollar is at 2.233 and is holding relatively steady. The economy in Brazil is varied with the very wealthy living by the beautiful coast to the very poor who live in favelas in the hills and so as a result the currency can be quite volatile. In the last few days the Brazilian Central Bank announced it was extending it scheme to try and control the BRL by selling $198.8 million of its foreign exchange swaps and rolled over contracts worth a further $494.3 million and as a result the Real strengthened. The reason the Central Bank did this is to try and stabilise the exchange rates but with the world cup being hosted in their country it is hoped that this will boost the economy and generate some strength for the currency. If you are heading to the world cup the interbank price on GBP BRL is currently 3.758.

Croatian Kuna (HRK)

The Croatian Kuna was also introduced in 1994 and is divided into 100 Lipa. Created by the Croatian National Bank (CNB) and replaced the Croatian Dinar it is loosely pegged to the Euro and the CNB aim to keep the currencies fluctuations relatively small and in line with the Euro. However, Croatia joined the European Union on the 1st July 2013 and are expected to join the European Monetary System meaning they will eventually take on the Euro to replace the Kuna within 2-3 years. Currently the Sterling Kuna exchange rate is 9.4259

 

So, when paired together the currencies have things in common, not least the fact they have been in circulation since 1994, but it seems like the outlook for the BRL is much brighter with the Kuna possibly relatively soon to be phased out. The exchange rate on the BRL to the HKR is 1BRL acheives 2.50HKR. So, if we are to take the relative strengths of the two nations currencies as a yard stick for tonights match we should expect the hosts Brazil to be too strong for Croatia and the world cup to get off to a real bang! Tomorrow, we will be evaluating the prospects of Chile and Australia.

If you would like to discuss your currency requirements please feel free to either give us a call today on 0800 328 5884 or if calling from abroad on 0044 1494 725353. Alternatively you can email me on trh@currencies.co.uk