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

To: posjim who wrote (7599)	9/6/1998 12:51:00 PM
From: Steve Fancy	Respond to of 22640

Brazil interest rate hike not enough - economists Reuters, Sunday, September 06, 1998 at 11:09 SAO PAULO, Sept 6 (Reuters) - Brazil's decision on Friday to raise interest rates is a short-term solution that does not protect Brazil from a possible financial crisis, according to economists interviewed by a daily newspaper on Sunday. The measure, aimed at stemming a flood of dollars out of the country, could actually unnerve investors even more, 15 economists told Folha de S. Paulo newspaper. On Friday, the Central Bank said it will temporarily lend money at its Tban assistance rate of 29.75 percent, and not at its traditional TBC prime lending rate, which was just cut to 19 percent. The measure ultimately raised the basic lending rate in Brazil to about 30 percent until September 30. Economists said the Central Bank was hoping to plug the flow of dollars out of the country. Traders estimate that some $5 billion fled the country in net outflows from the foreign exchange market last week, putting a drain on international reserves. At the end of August, a Central Bank official said that reserves only lost about $3 billion during the month despite a big outflow of $6.693 billion from forex markets. The Central Bank has not given a recent estimate of reserves. "The government preferred not to fool around before elections, but the loss of reserves could be devastating," said Celso Pinto in a column in Sunday's Folha. While the economists interviewed by Folha said the measure could stem the flow, it will not attract new investments and could have very negative affects on the public deficit and economic growth. "The cost of federal debt is going to rise considering that 60 percent of it is indexed to the overnight interest rate," Pinto said in his column. He said the government could pay an extra $8 billion to finance its domestic debt. Some economists said the government will have to come up with more financial policy changes and perhaps even seek outside help if it wants to fend off a crisis. Copyright 1998, Reuters News Service

To: posjim who wrote (7599)	9/6/1998 12:53:00 PM
From: Steve Fancy	Respond to of 22640

Latin American Leaders Warn Of Spreading Market Crisis Dow Jones Newswires PANAMA CITY, Panama (AP)--Latin American markets are being rattled by the Russian and Asian economic crises, but a meltdown can be avoided if industrialized nations take proper steps, regional leaders said this weekend. The 14-member Rio Group of Latin American leaders urged the world's seven most-industrialized nations and world financial groups "to immediately take the necessary steps to restore stability and guarantee growth of the world economy." When Mexican President Ernesto Zedillo arrived for Saturday's gathering, he suggested the group focus on the financial crisis. "So far, the costs of this instability are manageable in the measure that we have not seen an economic contraction in the United States or Europe," Zedillo said as the summit wrapped up late Saturday. But if industrialized economies should further weaken, it could provoke a world recession, he said. "This is what we believe should be avoided at any price," Zedillo said. The Rio Group expressed confidence that its economies can withstand the current storm - a position echoed by the International Monetary Fund last week. The Mexican leader, who will preside over the Rio Group's 1999 meeting, noted that his country and other Latin American nations have made structural reforms and policy adjustments in recent years. With the Asian and Russian crises rattling investors, Zedillo urged the international community to do whatever it could to prevent further pull-out from emerging markets. The 10 Latin American presidents attending the summit along with four top officials from other countries expressed their confidence in the free-market reforms that have swept the region in the last decade. "We reaffirm our commitment to handle in a responsible way those economic policy mechanisms that guarantee growth and stability," their statement read