The strong currency, another cornerstone of the Real Plan, has encouraged imports contributing to a growing trade deficit and restrained export growth. Brazil's more stable economy allowed it to weather the fallout in 1995 from the Mexican peso crisis relatively well. Record levels of foreign investment have flowed in, helping support the Real Plan through financial shocks in October-November 1997 that occurred in the wake of the Asian financial crisis. Some foreign investors remain concerned about the viability of Brazil's exchange rate policy because of the country's fiscal and current account deficits. The government thus has to contend with the possibility of capital flight or a speculative attack that could draw down foreign reserves to a critical level and force a devaluation.
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