Brazil Currency, Markets Continue Slide The Brazilian currency fell to its weakest point of the year in midday trading Wednesday as investors continued to shift money out of emerging markets toward more secure investments.
ELMATL Real need to drop to kick off expor machine. Exporters -suffering now- need to be happy until after election end of this year.
Brazil Currency, Markets Continue Slide
© 2006 The Associated Press
RIO DE JANEIRO, Brazil — The Brazilian currency fell to its weakest point of the year in midday trading Wednesday as investors continued to shift money out of emerging markets toward more secure investments.
The capital flight was also apparent on the Sao Paulo Stock Exchange, where the benchmark Ibovespa index shed more than 3 percent in intraday trading.
The real hit an intraday low of 2.363 to the dollar, down from Tuesday's close at 2.293. The real opened Wednesday at 2.34 to the dollar.
It was the real's weakest intraday quote since Dec. 19, when it hit 2.382 to the dollar. This year, the real hadn't traded weaker than 2.338, reached on Jan. 19.
Fearing that rising inflation in the U.S. would spur further interest rate increases, investors continued to shift funds into safe havens such as U.S. Treasury bonds. That tendency intensified earlier in the session after the U.S. Commerce Department reported a sizable drop in durable goods orders in April.
Treasurys, however, were volatile as well, with the yield on the U.S. Treasury 10-year note diving below the 5 percent level after the release of the durable goods order data, but then bouncing back after stronger than expected new home sales data were released in the U.S.
Further weakening the real is the fact that Brazilian companies are holding back on overseas bond issues because of declining international market liquidity, traders said. |
