10 Reais – Brazil

In 2014, Brazil's currency, the Real (BRL), faced significant pressure amidst a deteriorating economic and political landscape. The year began with the BRL trading around 2.25 to the US dollar, but it weakened steadily, closing the year near 2.65. This depreciation was driven by a combination of external and internal factors, including the tapering of quantitative easing by the US Federal Reserve, which reduced global liquidity and investor appetite for emerging market assets like Brazil's. Concurrently, global commodity prices, a crucial source of Brazil's export revenue, began to soften, worsening the country's current account deficit.

Domestically, the situation was exacerbated by profound economic mismanagement. President Dilma Rousseff's administration, having used significant fiscal stimulus to combat the 2008 financial crisis, was now grappling with the consequences: high inflation, stagnant growth, and a loss of investor confidence. The central bank, under pressure to control inflation which was breaching the upper limit of its target band, was in a difficult position, as raising interest rates to support the currency and curb inflation would further stifle an economy already entering a recession. This policy dilemma created uncertainty in financial markets.

Furthermore, the currency's decline was accelerated by the unfolding Petrobras corruption scandal (Operação Lava Jato), which erupted in early 2014. The investigation revealed massive graft and mismanagement at the state-controlled oil company, symbolizing a broader crisis of governance. This political shock severely damaged Brazil's investment-grade credibility, prompting capital flight and increasing the risk premium demanded by investors to hold Brazilian assets. Thus, by the end of 2014, the Real's weakness was a clear reflection of a "perfect storm" of fading global tailwinds, domestic economic stagnation, and a profound political crisis that eroded institutional trust.