Impacts of Exchange Rate Instability upon the Brazilian Agribusiness

Aware of the Brazilian agribusiness participation evolution in the international commerce and of the exchange rate uncertainty view, this study aims to evaluate how the exchange rate instability have affected the agricultural exports and imports flows among Brazil and its main commercial partners (Germany, Argentina, Chile, China, Japan, Holland and the USA), from 1989 to 2011. In order to answer this question, it was done some estimative of a gravitational equation for exportations and importations of the Brazilian agribusiness sector. The results obtained by this analysis show that agribusiness importations and exportations among Brazil and its partners were negatively affected not only by their own exchange rate uncertainty, but also by the exchange rate instability of the partners in analysis. Therefore, economic stability and the reduction of uncertainty about exchange rate movements are important measures to be considered, if Brazil wishes to increase the agricultural trade with the partners analyzed