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

To: Steve Fancy who wrote (7023)	8/21/1998 7:42:00 PM
From: Steve Fancy	Respond to of 22640

Latam markets wracked by emerging market panic Reuters, Friday, August 21, 1998 at 19:32 By Carlos A. DeJuana BUENOS AIRES, Aug 21 (Reuters) - Latin American financial markets were pummeled by panic selling Friday as investors feared the financial crises lashing Asia and Russia had hit American shores. Stock exchanges from Mexico City to Buenos Aires all opened with steep drops following overnight selling in Asia and panic in Europe as investors shed stocks of companies doing business in Latin America. "No one wants to be here at the moment," a trader in Brazil said, echoing sentiment across the region. The latest wave of heavy selling began Thursday when Latin America awoke to rumors of an imminent devaluation in Venezuela. That fanned fears that other countries, like giant Brazil, would be forced to mimic the devaluations that have rocked Asia. At midday Friday, Venezuela announced it would maintain its currency exchange system but would allow its bolivar to fluctuate more freely within a determined range. This was expected to pressure the currency down further. Immediately after the announcement, Argentina's MerVal <.MERV> index was down 8.8 percent and Mexico's IPC <.MXX> index was off 6.72 percent. Even before the news in Caracas, Brazil's Bovespa (INDEX:$BVSP.X) had tumbled 10 percent, prompting a 30 minute shutdown in trading to calm the market. Latin American currencies were also taking a beating in morning trade, with Mexico's 48-hour peso contract down to historic session lows of 9.78/9.81 pesos per dollar and Colombia's peso nosediving to new lows against the dollar at 1,415.50 pesos. Venezuela's bolivar was off Friday to as far as 576 to the dollar from Thursday's close of 573.75. "All the markets in Latin America are looking bad. This is about Russia and Asia, and Venezuela definitely brought it home. People are starting to get scared over Latin America," fund manager Gabriel Ruiz at Argentina's Banco Quilmes said. "I wouldn't individualize this, though. It is about general emerging market fears," Ruiz added. Latin American debt was also getting battered, with investors seeking a higher return on their investment due to the perceived greater risk in the region. The spread, or difference, between regional par bonds and similarly-dated U.S. securities widened sharply. The spread for Argentina's Par bond was up 1.5 percentage points to a yield of 13.65 percent, raising the cost to the country of paying its debt. The spreads between treasuries from both Brazil and Mexico over that of similar U.S. securities widened by about 70 basis points. The 30-year U.S. Treasury bond yields had meanwhile reached record lows with a yield of 5.39 percent as investors piled into the safe haven of U.S. bonds. Investors said that while yield spreads were still slightly below the peaks seen in late 1994 and early 1995 after a devaluation in Mexico triggered the "tequila" crisis, the global reach of the crisis was wider this time around. "This one is much worse than 1995 and there is more of this to go," said David McWilliams, a debt strategist at Banque Nationale de Paris in London. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (7023)	8/21/1998 7:44:00 PM
From: Steve Fancy	Read Replies (4) \| Respond to of 22640

Brazil's Govt Says No Need To Adjust Interest Rates Dow Jones Newswires BRASILIA -- The Brazilian government said Friday that it has no intention of decreeing a moratorium on its debt payments nor of adjusting interest rates in spite of the current market turmoil. When asked by reporters if Brazil would follow Russia's example of a moratorium on debt, assistant government spokesman Georges Lamaviere said, "There is no consideration of this hypothesis." Speaking at the daily press briefing at the presidential palace, Lamaviere said the government rules out any possibility of fiscal austerity measures to deal with the current crisis. He said if any measures are to be implemented to deal with the market turmoil, they will be taken by the central bank. Brazil's Sao Paulo Stock Exchange Bovespa Index closed 2.9% lower Friday, but fell as much as 10% during the day as investors sold heavily in markets all the world over. The Bovespa Index has lost 27% since Aug. 1 and dropped 11% this week.