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

To: Steve Fancy who wrote (8596)	9/29/1998 12:33:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex markets lost $739 million on Monday Reuters, Tuesday, September 29, 1998 at 09:12 SAO PAULO, Sept 29 (Reuters) - Brazil lost $739 million through its foreign exchange markets Monday, the biggest one-day net dollar outflow in two weeks. Dollar flight picked up in a sign that the calming effect of a sharp interest rate hike may be wearing off. Some $607 million fled through Brazil's commercial forex market on Monday, the Central Bank said, while another $132 million left through the floating forex market. Since the beginning of August more than $30 billion has fled Brazil through the forex markets, spurring the government to raise interest rates to almost 50 percent, to plug the drain on reserves and shore up its currency. The measure slowed dollar outflows to about $500 million a day, down from an average $1.5 billion a day. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8596)	9/29/1998 12:34:00 PM
From: Steve Fancy	Respond to of 22640

LatAm mkts hold their breath ahead of FOMC meeting Reuters, Tuesday, September 29, 1998 at 11:03 By Shasta Darlington SAO PAULO, Sept 29 (Reuters) - Latin American markets were little changed in light trade Tuesday as investors held out for a possible cut in U.S. interest rates at today's meeting of the Federal Reserve's policy-setting wing, traders said. "We're just here resting," said a trader at a brokerage in Mexico City. Markets also eyed Wall Street, tracking the Dow Jones Industrial Average, which was off slightly by 0.45 percent at 8,072 points. Markets across Latin America saw trade slow to a trickle and volatility abate ahead of the Federal Open Market Committee meeting. A cut in U.S. interest rates could make emerging market investments more attractive, spurring investors to overlook the greater risk involved, traders said. Stocks sank and yields on emerging market debt soared in mid-August after Russia devalued its currency, sending investors running for cover in the United States. Still, most traders said that bolsas, as well as the Dow, have priced in a rate cut of at least 25 basis points. If no cut is announced, markets could buckle. "If...the committee decides to not modify the short-term rate, we will witness very strong selling," Cohen brokerage in Buenos Aires said. Argentina's blue chip MerVal <.MERV> index was off 0.66 percent in midday trade at 3,692.5 points. "Prices should hang around yesterday's close with very little variation and little volume," trader Daniel Costantino at Banco Privado said. In Brazil, Sao Paulo's key Bovespa (INDEX:$BVSP.X) index was off 0.25 percent at 6,810 points after seesawing all morning around the opening level. "All will depend on the results of the FOMC meeting," said one trader at a major investment fund in Sao Paulo. "I feel that a rate cut of 25 basis points may already be factored in, but we cannot gauge just what the sentiment will be like." The Bovespa may see wild swings today if liquidity remains low, brokers said. Investors were also staying away from the market ahead of the October 4 general elections, worrying about the country's economic outlook following the polls, they said. Equity investors continue to be concerned over a renewed wave of capital flight. Some $739 million was reported to have left the country's foreign exchange markets on Monday, the biggest dollar outflow in two weeks. Over $30 billion has left Brazil since the beginning of August. In Chile, the IPSA <.IPSA> index of the leading 40 stocks was off 0.39 percent at 66.11 points in midday trade. In Mexico, trading in the stock and foreign exchange markets was light ahead of the FOMC meeting, traders said. The leading IPC index <.MXX> slipped 0.8 percent to 3,686.66 points and the currency was little changed at 10.10 pesos to the dollar. In Venezuela, the benchmark IBC stock index <.IBC> inched up 0.4 percent to 3,740.92 points. "There isn't any volume," a trader at a Mexico City stock brokerage said. "The whole world's just waiting for the Fed's decision and tracking the Dow Jones a little." Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8596)	9/29/1998 12:38:00 PM
From: Steve Fancy	Respond to of 22640

Bear Stearns sees Brazil defending real Reuters, Tuesday, September 29, 1998 at 11:28 Nevertheless, he said he expected an "extended but ultimately successful defense of the real, creating upside potential for the economy and the financial markets once over the hump." The Bear Stearns economist noted October was a key month, with the IMF meeting taking place as the country goes to the polls to likely re-elect President Fernando Henrique Cardoso. He said he suggested a shift in analytical focus away from the possibility of an international financial package for Brazil to possible fiscal measures. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8596)	9/29/1998 12:39:00 PM
From: Steve Fancy	Respond to of 22640

Brazil forex mkts seen losing up to $600 mln Reuters, Tuesday, September 29, 1998 at 12:02 Brazil lost $739 million on Monday, the biggest one-day dollar outflow in two weeks, in a sign that capital flight is picking up a bit of speed again. A rush to abandon emerging markets has spurred investors to yank more than $30 billion from Brazil's forex markets since the beginning of August. A sharp hike in interest rates to almost 50 percent slowed dollar outflows to an average of $500 million a day from a peak of $1.5 billion a day. Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (8596)	9/29/1998 12:53:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Bovespa To Change Trading Hours Effective Oct. 13 Dow Jones Newswires SAO PAULO -- The Sao Paulo Stock Exchange, known as the Bovespa, announced Tuesday that trading hours will be pushed back one hour effective Oct. 13, the first business day after daylight savings goes into effect in Brazil. A Bovespa spokeswoman said that trading will begin at 11 a.m. local time (1300 GMT), from 10 a.m. Floor trading will stop between 1530 GMT and 1630 GMT, with the session ending at 2000 GMT. Brazil sets its clock ahead one hour on Oct. 11. The following day is a bank holiday.

To: Steve Fancy who wrote (8596)	9/29/1998 12:54:00 PM
From: Steve Fancy	Respond to of 22640

Brazil To Ask For Intl Funds To Tap When Needed - O Estado Dow Jones Newswires SAO PAULO -- Brazil's government will tell the world's financial leaders this week that it doesn't require emergency funding now, but would like to have resources to tap when needed, the O Estado de S. Paulo newspaper reported Tuesday. Brazilian Finance Minister Pedro Malan and Central Bank President Gustavo Franco will tell the multilateral organizations, the U.S. government and private bankers that Brazil needs their backing to regain the confidence of the international markets, O Estado said in its front-page story. Malan and Franco travel to Washington and New York this week for the meetings of the International Monetary Fund, the World Bank and the Group of Seven leading industrial nations. O Estado said that the government doesn't reject negotiations with the IMF on an accord. "To the contrary, the announcement of financial help from the fund is well received by the government, but at this moment it should serve more to stimulate the recovery in confidence of foreign investors in Brazil," O Estado said. O Estado said that, for the third time in two decades, the spotlight at the IMF meeting will be on Brazil. In Toronto in 1982, Brazil's external financing dried up when Mexico declared a moratorium on debt payments. No emergency funding came out of the meeting and banks suspended lending, which led to a moratorium on Brazil's debt in 1987. In Bangkok in 1991, the government of Fernando Collor de Mello made headway on negotiations with the fund that eventually resulted in a stand-by agreement.

To: Steve Fancy who wrote (8596)	9/29/1998 12:56:00 PM
From: Steve Fancy	Respond to of 22640

U.S. Trade Official Praises Brazil's Fiscal Reform Efforts Dow Jones Newswires BRASILIA -- The U.S. government is pleased with Brazil's commitment to fiscal austerity and is keeping a close eye on what measures the Latin American giant will implement to stop the current market crisis from deepening, a top U.S. trade official said Tuesday. U.S. Deputy Trade Representative Richard Fisher spoke with reporters after a meeting Tuesday with Brazilian Finance Ministry executive secretary Pedro Parente. "The ministry gave us some insight on the measures that could be taken," Fisher said, without providing specifics. "We're watching very closely and we're eager to be helpful." Last week, President Cardoso, who is expected to win reelection next Sunday, pledged to tackle Brazil's burgeoning public deficit. Market analysts predict that the belt-tightening measures will be unveiled shortly after the election. The U.S. official also praised Brazil's efforts at structural reforms in recent years. "Brazil has made more progress than most Asian countries in terms of transparency and efficiency," Fisher said. "A good (Brazilian) government is under attack by what's happening on financial markets." "The whole world is watching Brazil," he added, noting that Brazil's stability is crucial for the U.S.. - By Stephen Wisnefski; (5511) 813-1988; swisnefski@ap.org

To: Steve Fancy who wrote (8596)	9/29/1998 12:58:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

U.S. Rate Cut Would Have Limited Real Impact On Brazil By MARIANNE SULLIVAN Dow Jones Newswires NEW YORK -- A U.S. interest rate cut would help calm global markets and, by extension, aid Brazil, but analysts warn it wouldn't resolve the underlying problems of Latin America's largest economy. The U.S. Federal Reserve's Federal Open Market Committee began meeting early Tuesday amid widespread speculation that it will lower interest rates by at least 25 basis points. A U.S. rate reduction would send out an important signal that the Fed wants to see more liquidity in battered global markets. Like discussions of a huge aid package for Latin America, it would help boost the confidence of international investors in countries like Brazil, economists said. "It is clear that the international community wants to let everyone know that it wants to stop the contagion," said Richard Fox, director for Latin American sovereigns at Fitch IBCA in London. But economists warn that a U.S. rate cut won't immediately resolve Brazil's mammoth debt load or skyhigh interest rates. "Rate cuts alone will not reverse the trend in Brazil. Even if the U.S. lowers rates, Brazil will still need money from abroad," said Felipe Garcia, Latin American economist at I.D.E.A. research firm in New York. The country must roll over about $80 billion of domestic debt by the end of the year. To halt capital flight, Brazil's central bank earlier in the month nearly doubled the ceiling on interbank loan rates to almost 50%. "A rate cut will not affect Brazil's debt, and it is farfetched to claim that," said Ernesto Martinez, Latin American economist at Moody's Investor Service in New York. Most of Brazil's debt will have to be paid at its high domestic rates. And these rates, said Fitch's Fox, won't be significantly affected by lower U.S. rates. "It won't allow Brazil to lower rates. Brazil's rates are determined by domestic considerations," Fox said, pointing out that foreigners play a "quite limited" role in financing Brazil's budget deficit. Foreigners, said Fox, hold about $5 billion of the country's $350 billion in domestic debt; the bulk is held by domestic pension funds, mutual funds and banks. Still, a drop in U.S. rates would be particularly well-timed for Brazil, which will hold presidential elections this Sunday. "A rate cut can get them through the election," said Stephen Jonathan, director of the foreign exchange desk at Merrill Lynch. In addition, meetings of the International Monetary Fund, World Bank and Group of Seven industrialized countries are getting underway in Washington D.C. this week, and there is much speculation a support package for Brazil will be on the agenda. Pedro Perez, Latin American strategist at Barclays Capital in New York, said a cut itself wouldn't change the overall size of a relief package. "But if confidence returns to the country, $25 billion to $35 billion may be enough. If there is still significant risk aversion, more may be needed." Perez said a U.S. rate cut "will have an effect on global financial confidence and the stock market. That will hopefully stop the capital flight from Brazil." Since the end of July, Brazil's foreign reserves have fallen to below $50 billion from over $70 billion as investors fled the country. - By Marianne Sullivan; 201 938-4375 marianne.sulliva@cor.dowjones.com