Exchange Rates and Inflation: Influence of the exchange rate on the Brazilian economy from 1999 to 2015

This study aims to verify the influence of the exchange rate on inflation in the Brazilian economy during the period from the beginning of the inflation targeting regime to the present day, i.e., from 1999 to 2015. To this end, a bibliographic investigation was conducted on inflation and exchange rates, which are the subjects of this study. After collecting data on the IPCA (broad consumer price index) and IGP-DI (general price index – domestic availability) inflation indices and commercial and nominal exchange rates, this data was analysed to verify the correlation between inflation and exchange rates. To this end, Pearson and Spearman correlation coefficients were used. The results show that the exchange rate in relation to the IPCA has a moderate correlation in the first months, while the correlation in relation to the IGP-DI is weak from the second month onwards. For the Spearman indices, hypothesis H0 (no association between the variables) was rejected. The research shows that in the Brazilian case, the exchange rate has a strong influence on inflation.