Sovereign Fund Of Brazil

The Sovereign Fund of Brazil is a sovereign wealth fund created by Brazil.

The Sovereign Fund of Brazil is a fund created in 2008 with the intention of providing support to Brazil. The fund is for specific objectives that include projects that are of strategic interest to Brazil and that help Brazilian firms expand abroad. It also helps the economy absorb fluctuations during non-favorable economic cycles.

The government of Brazil founded the Sovereign Fund of Brazil with an initial target of $20 billion. With Brazil's booming foreign currency reserves, which rose by $32 billion in 2009 to $239 billion, the government created the sovereign fund. In January 2010, the Brazilian government said it would permit the fund to buy U.S. dollars in the foreign-exchange market in a bid to stem the Brazilian real's rise. The Brazilian real, the currency used in Brazil, is composed of 100 centavos and in the Forex markets is represented by the acronym BRL. The currency was adopted in 1994, and is regulated by the Central Bank of Brazil’s Monetary Policy Committee.

The Sovereign Fund of Brazil is a type of sovereign wealth fund. When a country sets aside a pool of money derived from the country’s own reserve for investment, it is referred to as sovereign wealth fund. The idea of sovereign wealth funds began in the 1950s as a way to deal with a country’s budget surplus. The first of its kind was Kuwait’s Investment Authority which Kuwait’s government established in 1953 in order to deal with revenue from oil.   

A sovereign wealth fund’s purpose is to benefit the country's economy and citizens. Commonly a sovereign wealth fund will earn income from a central bank reserve’s budget and trade surpluses or revenue generated from the country’s natural resources. The investments available to sovereign wealth funds differ from country to country.  

The largest sovereign wealth fund is the Norway’s Government Pension Fund Global with over a trillion dollars in assets.  The country’s fund was previously known as the Petroleum Fund of Norway and was set up with surplus funds from oil sales. The United Arab Emirates also has a large sovereign wealth fund, which comes from the country’s oil reserves, and as of 2017 was valued at about $828 billion. Because the UAE depends heavily on its oil exports, and in order to protect itself from oil-related risk, the country’s sovereign wealth fund diversifies the nation's assets.