AUGUST 1, 2002
Brazilian racers facing hardships
The seemingly endless stream of young Brazilians racing in Europe could begin to dry up as the country faces economic problems, following the collapse of the banking systems in Argentina and Uruguay in recent months and uncertainty over the future because of the forthcoming election in October. In the course of the last two months the real has lost 38.8% of its value against the dollar and yesterday at one point dropped below 44% before rebounding after the Brazilian Central Bank moved to prop up the currency.
The crisis became so bad that it was hard for Brazilians to even buy dollars because the demand was so high.
The major problem for the country is that it has $250bn of debt at the moment and is threatened by perhaps being forced to default on repayments. Companies which are exporting goods are well-placed to benefit from the weakness of the real (notably oil company Petrobras) but those trying to fund foreign adventures with reals - racing drivers, for example - are finding that their money is buying fewer and fewer dollars. Similarly companies which are trying to increase their business outside Brazil are going to be less successful and so will be less willing to pay for sponsorship programs.
Many of those racing come from wealthy families and will not be affected but if the current trend continues even they will have to look at the budgets. Argentine racers have all but disappeared from the international scene since the collapse of the country's banking system last winter.
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