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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (21182)	7/28/2000 4:19:29 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil CenBank says new clearing system to up ratings Reuters, 07/28/2000 14:56 SAO PAULO, July 28 (Reuters) - The introduction of a new clearing system for Brazil's financial sector in July 2001 should improve the country's debt ratings, a senior Brazilian Central Cank official said on Friday. "The new system will iron out a big distortion," bank monetary policy director Luiz Fernando Figueiredo said at a National Association of Open Market Institutes (Andima) breakfast. "An efficient payments system will move our rating." Figueiredo said the new system, in development since June 1999, would make clearing easier and require financial institutions to guarantee themselves through a clearing system. The government currently guarantees financial institutions. "The aim is to remove the liability the government carries for systemic risk from the financial system," he said. The monetary policy director said the government would begin a campaign to inform the public about the changes in November. Figueiredo also said a project that follows 21 changes in the payment system in November aimed at increasing liquidity in the secondary bond market had been open for consultation since last Friday. Among the changes was the introduction of electronic bond trading in the secondary market, which was being implemented by Andima and the Cetip bond clearing house on Friday. On interest rates, Figueiredo said the latest data showing inflation had accelerated after harsh, cold weather pushed up food prices was not a reason for increasing rates. "To think that a frost will move the interest rate makes no sense," he said. "We won't make a decision (on rates) on just one, or even two or three factors." On Thursday Andima said Brazil's IPG-M inflation index rose to 1.57 percent between June 21 and July 21 from 0.85 percent in the previous period. On the same day, the University of Sao Paulo's Economic Research Institute (FIPE) said prices in the industrial hub of Sao Paulo rose 0.97 percent in the four weeks to Sunday, above the first quarter high of 0.87 percent. FIPE blamed the increase on rising prices for food and fuel. The price of foodstuffs such as corn, coffee and grain have risen recently as Brazil suffers what officials have called one of the worst winters in recent years. The southern state of Parana was one of the worst hit after frost wiped out 74 percent of the projected 2001 coffee crop. But the central bank's Monetary Policy Committee (COPOM) has taken the market off guard by slashing 200 basis points off the benchmark Selic interest rate since June 28 to bring it down to 16.5 percent despite the price rises. Figueiredo stressed that interest rate decisions were based on several factors, including inflation and international prices, and added the central bank tried to avoid taking the market by surprise with rate moves. "A Copom decision can be different from expectations, but to get it right you have to look at the fundamentals," he added. Copyright 2000, Reuters News Service