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

To: Steve Fancy who wrote (9014)	10/15/1998 11:22:00 AM
From: Steve Fancy	Respond to of 22640

Brazil Top Govt Official In Urgent IMF Talks - Newspaper Dow Jones Newswires BRASILIA -- The Finance Ministry's executive secretary Pedro Parente is traveling to Washington Thursday for urgent talks with the International Monetary Fund (IMF) on Brazil's planned fiscal emergency measures, the newspaper Jornal de Brasilia reported Thursday. A spokeswoman at the Finance Ministry said she couldn't confirm the report, as Parente and his immediate staff were not in their office Thursday morning. She said a visit to Washington by Parente wasn't on the Ministry's official agenda for the day. Other Ministry sources couldn't provide any further information. The Jornal de Brasilia claims Parente's visit to the IMF headquarters aims at updating executives at the Fund on details of the fiscal plan now being hammered out by the government's economic team. The measures are expected to be announced next week and include a fiscal clampdown to reduce expenditure, increase revenue and balance public accounts. The market is eagerly awaiting concrete details of the three-year government program as its measures are a requirement of receiving eventual funding from the IMF and other lenders. -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (9014)	10/15/1998 11:25:00 AM
From: Steve Fancy	Respond to of 22640

S. Paulo bourse posts more foreign capital outflow Reuters, Thursday, October 15, 1998 at 09:46 SAO PAULO, Oct 15 (Reuters) - The Sao Paulo stock exchange (Bovespa) said Thursday it saw a net 99.5 million reais worth of foreign investment leave the bourse in the first 10 days of October. Foreign buys during the period totalled 568.8 million reais, while foreign sales amounted to 664.3 million reais, the exchange said in a statement. The figures resulted in accumulated net foreign outflows of 2.072 billion reais so far this year. Market players attributed the persistent outflows to investors fleeing from Brazilian stocks amid worries about the country's economic outlook. The bourse had posted a foreign net capital outflow of 1.468 billion reais in September after posting a net outflow of 1.724 billion reais in August. ($1=1.18 reais) Copyright 1998, Reuters News Service

To: Steve Fancy who wrote (9014)	10/15/1998 11:26:00 AM
From: Steve Fancy	Read Replies (7) \| Respond to of 22640

POLL-Brazil's devaluation risk rises in medium term Reuters, Thursday, October 15, 1998 at 10:12 By Noriko Yamaguchi SAO PAULO, Oct 15 (Reuters) - The risk of a steep, sudden devaluation in the Brazilian real in 1998 or 1999 has increased due to the country's economic crisis, but remains unlikely, a Reuters poll of economists found. The poll of 40 economists in Brazil and the United States found the probability of an abrupt 15 to 20 percent devaluation between now and the end of 1998 rose slightly to 13.4 percent, from 12 percent in a previous poll in August. But the survey, conducted from October 9 to 13, found the likelihood of a devaluation in the first six months of 1999 rose more noticeably to 22 percent, from a previous 17 percent. Brazil, Latin America's largest nation, has been working with world lending agencies to secure a special credit line aimed at shoring up its currency, the real, amid steady capital flight. Economists say a devaluation in Brazil would probably throw the entire region into recession, which could provoke a slowdown in the U.S. economy. But Brazil's expected austerity drive combined with the likelihood of financial backing from the International Monetary Fund and other lenders made a devaluation this year unlikely, economists polled by Reuters said. But they said the risk rises in 1999, especially if Brazil continues to lose dollars. "Brazil will be forced to devalue if money keeps flowing out of the country," said Ken Colli, Latin American economist at Credit Lyonnais in New York. Colli said that if high interest rates cannot stem the outflow, the government will have to alter its rigid foreign exchange policy. The government jacked up prime lending rates to nearly 50 percent per year on September 10 in a drastic effort to plug a massive wave of capital flight. Some $30 billion have left local forex markets since August as investors, frightened that Russia's devaluation may repeat itself in Latin America, yanked out their cash. That has cut Brazil's currency reserves -- its best weapon against speculative attack -- to between $46 billion and $47 billion now. Economists say the real is overvalued by anywhere between 10 percent to 30 percent against the dollar, making it a target for speculators. In addition to the capital flight, economists fear Brazil will find it increasingly difficult to support the real as debt financing costs soar on higher interest rates. "The high interests would inexorably blow up Brazil's internal debt," said Bob Gay, Latin American strategist at Bankers Trust New York Corp. Brazil has about 60 billion reais ($50.8 billion) in domestic debt maturing by the end of 1998. Even so, most economists think Brazil has overcome the risk of a steep devaluation this year, after President Fernando Henrique Cardoso, the father of Brazil's currency was re-elected on October 4. "If you had asked the same question a month earlier, the chances of a forced devaluation must have been much higher," said Marcelo Allain, economist at BMC Bank in Sao Paulo. Many economists, including Allain and Bankers Trust's Gay, predict Brazil may respond to devaluation pressures by speeding up the rate at which the real gradually depreciates against the dollar. The Brazilian Central Bank has been depreciating the real, which trades in a tightly regulated band, by 7.5 percent a year since the currency was introduced in 1994. "The possibility the government should carry out a maxi-devaluation is zero up to next year," said Masaru Nakayasu, economist at Banco de Tokyo-Mitsubishi Brasil. "However, the Central Bank may speed up the rate it depreciates the real." Nakayasu predicted Brazil may allow the real to depreciate by up to 1.6 percent each month, compared with an average 0.6 percent currently. That would result in a depreciation of up to 10 percent in six months. Economists said the government might also attempt a "controlled devaluation" of the real, slicing its value either overnight or over a fixed period. But that would only be an option if international markets turn less volatile. "It could do that when external conditions become favourable, but the size of the cut would depend on the market," BMC's Allain said. Survey participants were asked the following question: Question: what are the percentage chances of a 15-20 percent devaluation in Brazil for the rest of this year and the first six months of 1999? (40 responses) 1998 H2 1999 H1 Average 13.4 pct 21.9 pct Median 10 pct 20 pct For more details on the poll, including previous results, please click on <BRAAO> <BRAAP> <BRAAQ>. Copyright 1998, Reuters News Service