There could be another land-mark achievement today - Softy market cap might have crossed $500 bil mark! <<Edit>> based on 2.7 bil fully diluted shares, it is off by about $40 bil. At this rate we should get there by Thursday!
While we party-on here, some other story over there:
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January 26, 1999
Signs of Further Currency Debilitation
Greet IMF Technical Mission in Brazil
An INTERACTIVE JOURNAL News Roundup
As an emergency mission from the International Monetary Fund arrived in Brazil to assess the troubles of the world's ninth-largest economy, the country's currency continued to weaken under market pressures.
By midafternoon in New York the real was off 3% against the dollar Tuesday at a mid-rate of 1.85 reals to the dollar from a closing rate of 1.79 on Monday. Buying of future contracts on the currency helped the currency recover from much sharper losses earlier, when it fell by as much as 7%.
As the currency took its early tumble some participants were dismayed that the country's central bank made no official move to defend the real. Upon confirming its new free-float exchange regime Jan. 18, the central bank said it would intervene only to contain sharp movements in exchange rates or a so-called dirty float.
Fitch Downgrade
Credit-rating agency Fitch IBCA heightened pressures on the Brazilian currency Tuesday, saying it had downgraded Brazil's long-term foreign and local currency ratings to B from B+ and BB- respectively, and taken them off RatingAlert negative.
"Brazil's devaluation and subsequent float of the real complicates an already demanding external and domestic financing position, " Fitch said in a statement. Fitch noted that the government could turn the devaluation to its advantage, but this would require a "decisive further tightening of fiscal and monetary policies at a time when both have been challenged by important political interests." The country's short-term foreign currency rating is unchanged at B, Fitch said.
Since unveiling the new policy Brazil's central bank has made no official intervention. Brazil's government had originally planned to make a gradual transition to a floating exchange system, but difficulty attaining fiscal reforms and contagion from foreign markets necessitated a more abrupt policy shift, the country's central banker said Tuesday.
Speaking at his confirmation hearing in the Senate's economic affairs committee Tuesday, the newly appointed central bank chief, Francisco Lopes, said that the government's previous policy of gradually widening the band in which the real trades against the dollar was too "timid." The policy resulted in an annual weakening of the real of about 7.5%.
Mr. Lopes assumed the top post at the central bank Jan. 13, following the resignation of his predecessor, Gustavo Franco.
Mr. Lopes immediately announced that the real would be allowed to move within a larger band against the dollar. Two days later, the central bank allowed the real to float freely, before formally adopting a free-float policy Jan. 18. Since Jan. 13, the real has lost about 35% of its value against the dollar.
The IMF is sending a "technical team" to Brazil to begin a review of economic conditions and the government's fiscal strategy, an IMF spokesperson said Monday. The spokesperson said in a telephone interview that a separate negotiating team -- which would discuss potential changes in policy stemming from recent events in Brazil -- will follow.
Some media reports have suggested the IMF was sending a negotiating team to Brazil first in the wake of last week's discussions between Pedro Malan, Brazil's finance minister, and officials from the IMF, World Bank, Inter-American Development Bank and U.S. Treasury department in Washington.
"Dialogue between the IMF and the Brazilian authorities continues to be pursued actively," the IMF spokesperson said. "Plans for an IMF mission to Brasilia to proceed with the program review and establish a new macroeconomic and monetary framework remain active.
The IMF had previously anticipated sending a technical team to Brazil early in 1999 to conduct a review of economic conditions before the disbursement of $9 billion in loans from both the IMF and the Bank for International Settlements -- the latter on behalf of 20 nations contributing to last November's $41.50 billion rescue package.
However, the need for a negotiating team to visit Brasilia stems from the decisions taken in past days by President Fernando Henrique Cardoso's administration to float the real in the face of growing foreign capital outflows.
Mr. Malan said near the conclusion of his Washington visit his government will be working closely with the IMF to make adjustments to the administration's fiscal strategy as a result of January's developments.
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