Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (39269)	8/20/1999 8:49:00 AM
From: Rarebird	Respond to of 116950

Falling Brazilian real will sink peso of Argentina Brazil real hits new lows on political fears SAO PAULO, Aug 19 (Reuters) - Brazil's ailing real BRBY> weakened to a new 5-month low of 1.921 to the dollar at midday Thursday after closing at 1.906 Wednesday as some firms bought dollars for hedging over political fears spawned by economic policy squabbles in the capital Brasilia. Traders said dollar demand seemed to be lower on Thursday. The Central Bank, which sold dollars in the foreign exchange market on Wednesday to help the real for the first time in months, did not intervene. Pervading the market is wariness over the growing divergence between the economic policy positions of President Fernando Henrique Cardoso and his governing four-party coalition in Congress. The latest blow to presidential authority came on Wednesday when Congress passed a measure to speed up voting on a bill to relieve a chunk of farmers' debt with the federal government. Cardoso has made clear the government was opposed to the farm debt pardon and he would veto such a bill. However, traders said Thursday that the embattled currency's fall could slow or stop, at least for the time being, at the lows not seen since March 8. A 5-month low was first hit on Wednesday. ''I see the real stabilizing slightly around 1.92,'' said Diniz Pignatari of ING Barings. ''There are still firms, especially small, buying dollars for hedging, but I do not see any banks buying dollars aggressively.'' ''There was no intervention today,'' said a trader with a major Brazilian bank. ''They are monitoring the market, probably preparing some steps if the real falls more, but this level seems to suit the central bank.'' Pignatari also said the bank did not intervene, adding that with a free floating rate he did not see a reason for the bank to spend money to peg the real to any level unless it was nosediving dramatically. Some traders said Wednesday's intervention was more of a reminder to the market that the bank was ''still there'' rather than a full-fledged currency rescue mission. Others noted, however, the bank may have signaled a resistance level for the dollar at around 1.9 reais. As mounting political apprehension dented markets, Central Bank chief Arminio Fraga, in a bid to lure more dollars into Brazil, announced on Wednesday that foreign investors will be exempted from a 0.5 percent financial transactions tax on fixed-income funds and foreign exchange deals. The falling Brazilian real will inevitably wrench the Argentine peso from its US dollar mooring. Some experts foresee a 30% to 40% devaluation of the Guacho currency.