Abstract
This paper shows that exchange rate depreciation has a negative effect on the balance sheet of Brazilian companies with foreign indebtedness; this effect stems mainly from the negative correlation between the exchange rate and international commodity prices. While the face value of liabilities increased in proportion to the exchange rate during the period studied, revenues from exporting companies did not increase in the same proportion, since most exporting companies in Brazil are commodity producers. Therefore, the hedge expected by exporting companies' receivables is less effective than expected. The paper also finds a negative relationship between debt by BNDES and the foreign currency debt; moreover, only total assets and total liabilities have significant effects on accessing BNDES debt. Brazil's high dependence on the production and export of commodities affects domestic companies' growth of domestic companies, suggesting that the correlation effect between exchange rate and international commodity prices must be considered when investigating companies' competitiveness.
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