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

To: djane who wrote (7553)	9/4/1998 11:27:00 PM
From: Steve Fancy	Respond to of 22640

Venezuela problems a "special case"-Peru's Baca Reuters, Friday, September 04, 1998 at 19:28 By Roger Atwood WASHINGTON, Sept 4 (Reuters) - Venezuela has become a "special case" in Latin America because of its shaky political outlook and investors should not lump it together with more stable countries like Peru and Chile, Peru's Finance Minister Jorge Baca said Friday. Baca, speaking after a meeting of top Latin American finance officials with the International Monetary Fund, said Venezuela's fiscal situation was sound but that, with elections in December, its political future was much less certain. "Venezuela is a special case because it's going to have elections shortly and the candidates are not the most appropriate, I would say. This is a personal view of course," Baca told reporters. The leading candidate in the election is a former army coup leader, Hugo Chavez, who has vowed to halt Venezuela's foreign debt payments. "Certainly Venezuela's case is not the common ground in Latin America. Particularly countries like Peru and Chile are in a strong position, and I don't think this should be generalized in terms of other countries," he said. Baca's comments gave the clearest sign yet that other Latin American governments were growing impatient with Venezuela's steady financial turmoil and felt it was hurting the region's standing as a whole. Many officials at the meeting, including IMF Managing Director Michel Camdessus, have rapped investors for not distinguishing between healthy and weak emerging market nations. But they have usually been reluctant to say clearly which markets they think are weakest. Baca said Brazil did not deserve a downgrade Thursday on the country's speculative credit rating by Moody's Investors Service Inc "because it does not reflect the efforts Brazil has made to reduce its fiscal deficit and fix its economy." But he offered no criticism on a similar downgrade for Venezuela, and nor would he say if Venezuela had ruled out a devaluation of its bolivar currency in the IMF meeting. Baca said Venezuela's fiscal position was strong but that its political future was very cloudy. "If you look at Venezuela's international reserves, you will see that there are plenty of reserves to service the debt. So there is no worry about that. I would say (it's) more a political situation in view of the coming election," said Baca. "There are other countries in the region, and as an example I can cite Peru, which have not only been doing things well in recent years but are also in a very solid situation on both the monetary and fiscal side," he said. He also said it was important for investors to differentiate strong Latin American economies from crisis-stricken emerging economies in Russia and Asia. "We definitely want to differentiate ourselves with respect to the situation in Russia, which is almost in a moratorium, and the Asian situation, which is completely different. Latin America has the right fundamentals." 898-8383, washington.economic.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: djane who wrote (7553)	9/4/1998 11:28:00 PM
From: Steve Fancy	Respond to of 22640

Brazil dollar seepage sends Latam markets reeling Reuters, Friday, September 04, 1998 at 19:02 (Updates with markets closed) By Michael Christie MEXICO CITY, Sept 4 (Reuters) - Spooked by fears that Latin America's industrial powerhouse might be forced to devalue, investors yanked dollars out of Brazil for the fourth straight day on Friday, sending regional markets into a tailspin. The dollar flight from Brazil pushed shares in Sao Paulo down by as much as 13 percent before they settled back to close 6.13 percent lower at 5837 points. In the tightly-regimented foreign exchange market, Brazil's real currency ended flat, but traders reported the Central Bank sold up to $1.0 billion to keep it within its specified bands, adding to outflows of $3.8 billion so far in September. In Mexico, jitters over Brazil sent the IPC stock index reeling by as much as 4 percent before it clawed back at the close to 3045.17 points, a drop of 1.84 percent. The peso plunged to a new historic low of 10.22/10.24 to the dollar, representing a devaluation of 21 percent for the year so far. "It's crazy here," said an Argentine trader, speaking for many in the region as currency and stock market crises that began last year in Asia, then spread to Russia, came flooding up Latin America's shores. In Buenos Aires, the MerVal shed 3.37 percent to close at 354.96 points. In Colombia, which devalued this week in a move some investors feared could set off a chain reaction, shares plunged 4.46 percent to end at 810.77 points, and the central bank apparently had to continue to intervene in the foreign exchange market to defend the peso, even at its new weaker level. Venezuela, regarded by many economists as the region's top devaluation candidate, bucked the trend as oil prices picked up and the government announced it had covered its fiscal deficit. The Caracas bourse edged 0.4 percent higher to 2737 points. While the markets bled, regional finance chiefs meeting in Washington were joined by International Monetary Fund (IMF) Managing Director Michel Camdessus in playing down the possibility of an Asian-style regional meltdown. Camdessus said brutally-timed downgrades by ratings agency Moody's, which added fuel to fears over Brazil by downgrading its debt on Thursday, merely reflected international financial turbulence and not specific regional problems. "The medium to long-term outlook for the countries of Latin America, to our common judgment here, remains strong," he said. In Brasilia, a presidential spokesman swore Brazil would defend the real ahead of October general elections. "If necessary, the Central Bank will take any measures needed in favor of the real, regardless of the elections," he said. Labor Day holidays in Brazil and the United States on Monday, however, could offer the markets a badly needed pause for breath. But ominously, Mexican Central Bank Governor Guillermo Ortiz said in Washington that he did not expect the financial crisis to end any time soon. "This is a crisis that does not look like it's going to have a quick solution. This probably is going to continue with us for a while," Ortiz told a news conference. He added that he was confident the peso, which in contrast to Brazil's real floats freely, would eventually correct itself. Brazil's Finance Minister Pedro Malan, meanwhile, laid the blame with the rest of the world, where the turmoil began. "We want a more favorable international climate and the responsibility is not only ours," Malan said. mexicocity.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: djane who wrote (7553)	9/4/1998 11:29:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Cenbank raises bank borrowing rate Reuters, Friday, September 04, 1998 at 19:06 BRASILIA, Sept 4 (Reuters) - Brazil's Central Bank said Friday it would lend temporarily to banks only at its higher TBAN assistance rate of 29.75 percent and would no longer lend at its prime lending TBC rate of 19 percent, a Central Bank spokeswoman said. She said the move would remain in place until Sept. 30. "This will probably result in a rise in market rates," she said, referring to the overnight rate, which is widely considered the effective indicator of official Brazilian interest rates. The overnight rate currently stands at an annual 19 percent. The Central Bank's move came amid a market crisis that has pounded Latin America, and in particular Brazil which relies on foreign investment to fund a big budget deficit. Brazilian shares closed at their lowest levels in two years as foreign exchange traders said net cash outflows from the country this week totaled more than $5 billion. Until now, the Central Bank charged the annualized TBC rate for interbank loans of up to $22 billion and the TBAN rate for bigger loans. The Central Bank said two weeks ago that, from October 1, it will offer the TBC rate for loans of up to $5 billion and the TBAN rate for loans higher than that, the spokeswoman said. Banks with outstanding loans at the TBC rate have until September 8 to repay the loan or have it extended at the higher TBAN rate, she added. brasilia.newsroom@reuters.com)) Copyright 1998, Reuters News Service

To: djane who wrote (7553)	9/4/1998 11:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Malan: Coord. Efforts Needed To End Global Turmoil Dow Jones Newswires WASHINGTON -- Brazilian Finance Minister Pedro Malan said Friday that Latin American policy makers want developed countries to take the lead in ending global financial turmoil. "We need an international context that's less unfavorable, more favorable, and the responsibility for this more favorable international context (comes in part from) the governments from the most developed countries," Malan said in a press conference. He spoke after a two-day meeting between Latin American and Canadian finance ministers and central bankers, the International Monetary Fund, and U.S. Treasury and Federal Reserve officials. Malan said that coordinated actions were needed to calm the panic in global markets, but wouldn't go into detail on specific proposals that are on the table. He said they would be further discussed in the coming weeks.

To: djane who wrote (7553)	9/4/1998 11:34:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

WRAP: Latin Amer Leaders Return Home With Little In Hand By CHRISTOPHER CHAZIN and MICHELLE WALLIN Dow Jones Newswires WASHINGTON -- If Friday's markets are a gauge, Moody's Investors Service won the tug-of-war with Latin American policy makers for hold of investor sentiment. Stock markets regionwide plunged and currencies weakened after Moody's on Thursday downgraded the credit ratings of Brazil and Venezuela and said it would consider doing the same to Argentina and Mexico. The news came just hours before Latin American officials urged markets to take note of the economic reforms they have labored to put in place. They pledged to do more if needed, even as they blasted irrational market behavior and urged investors not to lump countries into the same bag. "We are not going to nationalize already privatized companies, we aren't going to repudiate debt, we're not going to do anything wrong," Argentine Economy Minister Roque Fernandez said. "We are not Russia." That, in effect, was the point of the two-day meeting convened by International Monetary Fund chief Michel Camdessus. In a closing news conference Friday, Camdessus declared Latin America "on the right track" to weather the crisis and predicted a "strong" outlook for the region going forward. Despite such back slapping, Latin American finance ministers and central bankers who attended the two days of talks returned home with little in hand. Many economists had hoped the IMF would put up a reserve of funds to scare away currency speculators, or take other like-minded - if less costly - measures to soothe jittery investors. "I would say I wasn't impressed" with the statement produced by the meeting late Thursday, BT Alex Brown economist Christian Stracke said. "It didn't blow me away by any means." From the onset, analysts had questioned what the meeting could accomplish, given that the broadening global financial crisis has left the IMF stretched thin. But economists, particularly those at Wall Street investment banks, had hoped to see the IMF put at least some money where its mouth was - if not with some form of contingent fund, then perhaps by offering guarantees to long-term debt offerings that would allow select Latin American countries return to capital markets. "I don't think they need to come up with $60 billion in new funds," Stracke said, adding, "The benefits of a Latin bailout fund would outweigh the moral hazard of perhaps encouraging fiscally imprudent governments." Robert Fleming economist Omar Borla asked simply, "Where's the money?" Finance ministers and central bankers, though, repeatedly played down the notion that they had come to Washington with their palms open. "No one came to ask for resources or loans," Brazilian Finance Minister Pedro Malan insisted Friday. In part, analysts said that's because they couldn't, given that a request for aid from the IMF or other multilateral lenders would have undermined the region's stance that it was well positioned to handle the current turmoil. "A rescue package, after all, implies that there is something that needs to be rescued," said Riordan Roett, director of Latin American studies at Johns Hopkins University's School of Advanced International Studies. Instead, they wanted to issue a wake-up call that Latin America, unlike Asia or Russia, has adopted the reforms needed to survive the current crisis. Many criticized the Moody's rating changes as poorly timed and, as Borla put it, "too bold." "The financial markets seem to think that the IMF or the World Bank or someone has secret information from the countries that they can't get," said Catherine Mann, a senior fellow at the Institute for International Economics. "So they wait for a magic sign from the international institutions for them to move in a certain direction." On Friday, that direction was down, with Latin American stocks giving up further ground and currencies also weakening. Adding to that trend was a Dow Jones Industrial Average that fell nearly 42 points to end at 7640.25. In Brazil, the real ended unchanged in the spot market, though traders estimated the central bank spent about $2 billion to help keep it there. Sao Paulo's Bovespa stock index fell as much as 14% before springing back on the back of Camdessus's praise of Latin America to close 6.1% lower. Santiago's IPSA index closed off 3.0%, while the peso weakened as well. Mexico's IPC index closed down 1.8%, while its currency hit a new low of 10.22 pesos per dollar. In Venezuela - which ironically shrugged off the Moody's downgrade Wednesday - the General Index closed up 0.4%, due to a 6.8% jump in bellwether Electricidad de Caracas. Its currency, the bolivar, ended moderately weaker at 584.60 to the dollar. Argentina's Merval Index fell 3.4% after falling as much as 6.3% earlier in the session. "The best thing is that this is a long holiday weekend," Roett said. "We'll see what happens after Tuesday, when the communique (from the Washington meetings) begins to peek through into the market." -By Christopher Chazin and Michelle Wallin; 202-862-9291

To: djane who wrote (7553)	9/4/1998 11:41:00 PM
From: Steve Fancy	Respond to of 22640

Brazil Ctrl Bk Suspends Funding To Banks At TBC 19% Rate Dow Jones Newswires BRASILIA -- While capital streams out of Brazil at an alarming rate, the Brazilian Central Bank moved Friday to tighten its lending to local banks and curb their investments in the Brady bond market. The Central Bank suspended from Sept. 8 to Sept. 30 lending to banks at the basic rate, known as the TBC, now at 19%. Banks needing funding from the monetary authority during this time will have to borrow at the ceiling rate, known as the TBAN, which stands at 29.75% Payments due on previous borrowing at the TBC rate must be paid off on Sept. 8. Central Bank spokeswoman Silvia Faria said the bank took the measures because too much money was being borrowed by banks at the TBC rate to invest in Brady bonds. The measure was decided on Wednesday at the Central Bank's Monetary Policy Committee meeting, the Central Bank said. At that meeting the TBC rate was lowered to 19% from 19.75% and the TBAN rate was raised to 29.75% from 25.75%. Two weeks ago the Central Bank decided that banks borrowing money from the monetary authority at only less than a daily average of 5 billion reals (BRL) ($1=BRL1.17) - calculated on a weekly basis - will pay the basic TBC rate as from Oct. 1. A Central Bank spokesman said Friday this rule remains in force for the time being. Previously the TBC rate applied to loans up to BRL22 billion. "But as from Sept. 8 through Sept. 30 all will pay the ceiling (TBAN) rate," he said. The spokesman added that possible new measures might alter the BRL5 billion limit before Oct.1. He said the measure was aimed at diminishing cash in circulation and that this would consequently lead to a squeeze on consumer credit, but would not affect public accounts. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org