BRL needs to depreciate more to make Brazilian exports competitive

While the recent BRL depreciation is significant, it is not yet sufficient to make Brazilian exports (manufacturing in particular) competitive in a world where trade growth has declined considerably.

Given the rigidities in the labour market, external competitiveness requires a sufficient enough BRL depreciation.  

While BRL depreciated by 169% between 1998 and 2003, it has lost only 46% since 2013. At the same time, the nominal and real tradeweighted indices have depreciated by only 18% and 11% respectively since 2013 compared with a depreciation of 58% and 41% during 1998-2003. 

"Clearly, BRL must depreciate further to improve export competitiveness", says Societe Generale.