There is a clear agency problem in the hedging of Aracruz, and that is due to the financial gains for the company during the period. It was common knowledge to market players that in the period preceding the financial crisis of 2008 the Brazilian currency was in a process of appreciation due to significant influxes of external capital through financial and commercial channels. Specifically, carry-trade caused an influx of external capital of over U$70 billion in 2007 and was on pace to increase by 50% in 2008,