Brazil forex mkts stable after interest rate hike
Reuters, Friday, September 11, 1998 at 12:04
SAO PAULO, Sept 11 (Reuters) - Brazilian forex markets were
stable in midday trading on Friday as the market digested the
Central Bank's announcement late Thursday that it was hiking
interest rates to nearly 50 percent in a bid to plug massive
dollar outflows.
The local currency real was trading at 1.1788 to the
dollar, up 0.02 percent from its previous close, mainly
supported by the rate hike, dealers said.
Dollar outflows, which had been putting enormous pressure
on the real, were also seen slowing down on Friday, dealers
said. "The speed of the outflows have slowed down; we are so
far so good," said one forex trader at an international bank in
Sao Paulo.
Some dealers estimated that about a net $160 million had
left the country's commercial and floating foreign exchange
rate markets by midday, sharply down from $1.8 billion that
fled the country on Thursday.
"The general feeling in all Brazilian markets today is that
the worst seemed to have passed away," said the trader.
The Central Bank late on Thursday raised its basic lending
rate Tban to an annual 49.75 percent from 29.75 percent in an
apparent attempt to stem dollar outflows and keep the country's
foreign currency reserve levels high.
The bank said on Friday reserves now stood at $52 billion,
down from $67.2 billion at the end of August.
Some forex dealers said sentiment in the market was also
lifted on speculation that the Brazilian government could be
mulling aid from the International Monetary Fund (IMF) in a bid
to stave off a financial crisis and defend the real from a
devaluation.
But the government denied on Friday it had reached any type
of accord with the IMF. "There is no deal between Brazil and
the IMF. This is pure speculation," a spokesman for the Finance
Ministry told Reuters.
noriko.yamaguchi@reuters.com))
Copyright 1998, Reuters News Service |
