Brazil currency, stocks slip amid profit-taking
Reuters, Tuesday, May 11, 1999 at 15:56
SAO PAULO, May 11 (Reuters) - Brazilian financial markets
slipped on Tuesday morning after marking stellar gains in
recent sessions, as investors booked profits in equities and
the Central Bank was reported buying dollars in the currency
market, traders said.
The Brazilian currency, the real <BRBY>, weakened a hair to
1.649 per dollar ahead of the midday break from Monday's close
of 1.648 per dollar. Stocks on the benchmark Bovespa index
(INDEX:$BVSP.X) traded down 0.2 percent at 12,384 points.
"Today is generally weak with some sales to take profits,"
a stock trader at a local brokerage said.
The real has firmed 9 percent in the last two weeks as
foreign investors pour into Brazil, buying up stocks and
pushing the Bovespa up 15 percent to its highest in 18 months
amid optimism the worst of a currency crisis has passed.
Massive capital flight forced the Central Bank to shift its
foreign exchange policy on Jan. 13 and allow the real to float
against the dollar two days later. The currency slumped to a
record low close of 2.17 per dollar before working its way
back.
In the last couple of weeks, inflation has slowed and
interest rates have come down, making stocks one of the best
ways to bet on Brazil's improving economic position.
In the currency market on Tuesday, some traders said the
Central Bank intervened in the market, buying dollars to keep
the real from firming up too fast. Others said a few dollar
purchases to cover expiring loans put some pressure on the
real.
"The market is still seeing foreigners coming in, but some
locals are selling off," a forex trader at Banco Fator said.
At 1.649 per dollar, the real has lost 26.6 percent of its
value.
In the futures market, interest rate contracts fell even
further, reflecting market consensus that the Central Bank will
lower rates again.
The government on Tuesday plans to sell longer-maturity
National Treasury Letters -- maturing in 182 days -- for the
first time in a year, in a bid to bring rates down and lengthen
maturities in its debt portfolio.
Copyright 1999, Reuters News Service
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