Brazil Intervenes for 4th Day
To Prop Up Weakening Real
A WALL STREET JOURNAL ONLINE News Roundup
SAO PAULO, Brazil -- Weighed down by worries of neighboring Argentina's economic woes, the real slid to another new low Friday despite the central bank's efforts to prop it up.
Citing continuing concerns that Argentina could default on its $130 billion in debt or be forced to devalue its peso, traders sent the real plummeting to its weakest level since it was introduced in 1994 to stamp out inflation and stabilize the economy.
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The Central Bank intervened earlier in the day, selling dollars to try and bolster the currency. But after a brief blip upward to 2.520, the real headed south again, closing at 2.590 to the dollar.
The closing rate was off nearly four cents from Thursday's close of 2.553. It marked the fourth time in as many days that the real closed at record lows.
Brazil's net international reserves stood at $36.147 billion as of Thursday, a slight drop from $36.210 billion from Wednesday, the Central Bank said.
While Central Bank officials have dismissed the real's slide as largely a transitory downturn in the market, traders generally view the dropoff as reflecting the huge burden the Brazilian currency has to shoulder from its exposure to the Argentine crisis.
In Argentine developments, President Fernando De la Rua moved Friday to gather support for an austerity plan designed to reduce the risk of economic collapse. In a major coup that immediately boosted Argentine optimism, Mr. De la Rua won the backing of Raul Alfonsin, a former president and current leader of the main party in the ruling coalition.
But investors said the country's chronic economic problems, which have hit emerging markets across the world, were far from over and the South American markets would remain jittery next week |
