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

To: Steve Fancy who wrote (7913)	9/11/1998 5:42:00 PM
From: Steve Fancy	Respond to of 22640

IMF Fischer:Recent Brazil Steps Should Remove Mkt Doubts Dow Jones Newswires - - WASHINGTON -- Recent steps taken by the Brazilian government should reassure international investors that officials there are prepared to defend the stability of the currency and keep inflation down, Stanley Fischer, first deputy managing director of the International Monetary Fund (IMF), said Friday. "These are major steps by the Brazilians to defend itself," Fischer said. "They should remove the doubts" among investors, he said. But, if Brazil were to need a bail-out, the IMF would be there, Fischer said. The IMF "would stand ready to provide financial assistance," if necessary, he said, adding the Brazilians haven't asked for it as of now. Fischer noted that Brazil's government has announced a medium-term program to stabilize the public debt. Also, late Thursday, the Brazilian central bank boosted the key Tban interest rate to 49.75% from 29.75% to defend the real. During Brazil's recent financial troubles, which include rapidly declining foreign exchange reserves, an expanding fiscal deficit, mounting debt and a volatile stock market that fell 15% Thursday but rebounded 13% Friday, the IMF has kept in closer-than-usual contact with Brazil, Fischer said. "We have very good working relations with the Brazilians," and contacts have become frequent recently, he said. If Brazil had to maintain such high interest rates for a long period, "there is no question" it would face further fiscal problems, he said. But such an "extremely adverse" global market situation can't continue forever, he said. "This is a very testing time," he said. "It's unfortunate the contagion is taking place," he said. But "it will end" and "more normal capital flows will resume. For now, investors are still overreacting to the financial crisis in Russia, he said. "The situation in Latin America is very different," he added. After the debt crisis of the 1980s, Latin American leaders "understand that debt servicing is critical," he said. "They said so last week," he added, referring to an emergency meeting of Latin American finance and central bank officials hosted by the IMF in Washington to discuss a response to financial crises in Asia and Russia. Asked about reports that international financial institutions and the industrialized nations in the Group of Seven have been considering a contingency fund for Latin America if necessary, Fischer said Fund officials have been discussing the willingness to assist Latin America. But, as with Brazil, Latin American countries in general haven't requested such assistance, he noted. Reiterating comments he made Thursday, Fischer said the IMF will help countries willing to purse the right policies to help themselves "The Latin American (countries) have taken important measures to defend themselves and deserve support," he said.

To: Steve Fancy who wrote (7913)	9/11/1998 5:44:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Emerging debt prices recover, eyes stay on Brazil Reuters, Friday, September 11, 1998 at 17:04 NEW YORK, Sept 11 (Reuters) - Emerging debt prices recovered on Friday from the previous session's steep losses as investors reacted to an interest rate increase in Brazil and gains in U.S. equity prices, traders and analysts said. "The cost of betting against Brazil increased when the discount lending rate was raised to 49-3/4 percent from 29-3/4 percent," said Dan Peirce, head of emerging markets research at BancBoston Securities Inc. The Dow Jones Industrial Average ended up 2.36 percent at 7795.50, after Wall Street found no surprises in independent council Kenneth Starr's report on the White House sex scandal. Brazil is expected to stay under the market's microscope next week, as investors ponder the depletion of the country's reserves, the possibility of a devaluation of the real and any steps the government might take to decrease its seven percent fiscal deficit. "What we're really hoping for next week is no more bad news," Peirce said, referring to Brazil's severe capital outflows over the last week. "A little stability could be very healing," Peirce said. "There's been a huge extraction of capital from what had been a bloated market. Now the market is just numb." Many investors continued shying away from emerging market risk in the wake of Russia's recent devaluation of the rouble and the country's default on internal debt. Russian officials will give a presentation to the Group of Seven meeting of foreign and finance ministry officials in London on Monday, an official close to the talks said on Friday. "We hope there will some discussion of financial support from the G-7 for Brazil," said Siobhan Manning, Latin American analyst at PaineWebber. "It would be symbolically important if the G-7 came up with a line of credit to help restore investor confidence in Brazil." Benchmark Brazil C bonds <BRAZILC=RR> were up 1-1/2 to bid 53-5/8, Argentina PAR bonds <ARGPAR=RR> were up 1/2 to bid 59-1/4 and Russia PRIN paper <RUSPRIN=RR> was down 1 to bid 7-3/4. "When there is panic there is no liquidity and lots of volatility," one emerging debt trader said Friday. "That's what we've seen all day." Copyright 1998, Reuters News Service