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

To: Steve Fancy who wrote (11603)	1/13/1999 7:39:00 PM
From: David Petty	Read Replies (1) \| Respond to of 22640

Not quite the $2 billion rumored (of course there may be more to this than meets the eye... I do not trust anything, anyone says anymore): January 13, 1999 Dow Jones Newswires Brazil Ctrl Bk: Wednesday Forex Net Outflow About $700M Dow Jones Newswires BRASILIA -- Brazil's foreign exchange outflow on Wednesday was about $700 million, the Central Bank said late Wednesday. Earlier, market sources had pegged outflows at around $2 billion following the resignation earlier in the day of Central Bank head Gustavo Franco and the announcement of a shift in foreign exchange policy by his sucessor Francisco Lopes. "Some guesses by market sources quoted by news agencies today were really outrageous," a Central Bank spokesman told Dow Jones Newswires by telephone. By the end of trading some traders had been referring to talk sweeping through the market of a final outflow for the day as high as $6 billion. Usually the Central Bank only issues the day's foreign exchange flows through its Sisbacen computer system early the next morning. "We're making an exception to put things in perspective because of the exaggerated claims made today (Wednesday)," the spokesman said. He added Brazilian Bradys Wednesday behaved the same as the day before, "falling initially but then recovering later." The central bank's press officer said Brazilian banks bought $1.7 billion from the monetary authority during the day, but that part of this total was returned to the Central Bank later in the day. He described this as positive news "in view of the fact that only $700 million was sent abroad." -By William Vanvolsem; (5561) 244 3095; wvanvolsem@ap.org

To: Steve Fancy who wrote (11603)	1/13/1999 7:44:00 PM
From: David Petty	Read Replies (1) \| Respond to of 22640

Brazil's Forex Move Seen As Boon For Govt On Fiscal Reform By STEPHEN WISNEFSKI Dow Jones Newswires SAO PAULO -- Brazil's suprise move Wednesday to alter a long-standing exchange policy, coupled with the resignation of the central bank head, won't hamper the government's ability to push much-needed fiscal measures through Congress, and could even boost the chances of speedy approval, political analysts said. "What has happened (Wednesday) should bring (President Fernando Henrique) Cardoso and his government closer to Congress and make approval of fiscal reform easier," Brasilia-based political consultant Walder de Goes said. "The government is meeting the demands of several segments." Central bank president Gustavo Franco stepped down early Wednesday amid mounting pressure from various quarters for Brazil to cut interest rates and implement a more flexible exchange policy. Newly-appointed central bank head, Francisco Lopes, wasted no time in announcing the dollar would be allowed to float within a wider band than previously set, a move that resulted in a 8.2% weakening of the real in late trading Wednesday. While the events shook financial markets, sending the Sao Paulo Stock Exchange's Bovespa Index down as much as 10%, the political effect was seen as positive. Brazil's Congress has convened a special session to vote measures included in the government fiscal plan introduced last October. The plan seeks to shave 28 billion reals (BRR)($1=BRR1.32) from bloated government budgets and formed the backbone of an international aid deal worth $41 billion. "(Monday's) events... diminished the political pressure Cardoso's government has been feeling," said Eduardo Kugelmas, a political analyst at Sao Paulo think tank CEDEC. "By widening the band, he responded to the demands of several sectors that could have thwarted the fiscal adjustment plan." Congress late Wednesday approved three fiscal plan measures expected to generate BRR1.9 billion this year. The so-called provisional measures up for vote were announced by the government two weeks ago to help compensate for BRR6.7 billion in lost revenues owing to Congressional failure last year to approve a controversial tax hike included in the fiscal plan. While analysts had expected the measures to pass easily, they said the turnout at the joint session of Congress would provide an indication of the political impact created by Wednesday's events. As voting got underway, 440 of the 513 members of the lower house and 55 of 81 senators were present, a solid turnout by all accounts. Indications of support were also coming from the state level, where Cardoso has felt a political pinch over the past week following the announcement by the state of Minas Gerais - Brazil's third wealthiest - of a 90-day moratorium on debt payments to the federal government. Late Wednesday, Rio de Janeiro governor Anthony Garotinho, a Cardoso foe who last week hinted he might jump on the moratorium bandwagon, praised the move to effectively devalue the real, local Estado news agency reported. "The exchange policy needed to be more flexible because (the previous one) was unrealistic and was hindering Brazilian exports," Garotinho said, following a meeting with Finance Minister Pedro Malan to discuss the state's financial problems. Analysts said that the decision by Minas Gerais to suspend federal debt payments was likely the nail in the coffin for Gustavo Franco and provided the spark for the forex policy alteration. The lame-duck central bank head had reportedly told Cardoso last week that he wanted to step down from his top post at the Central Bank, but the president convinced him to stay until March. Political consultant de Goes said that Wednesday's events were precipitated by Minas Gerais's announcement, which spurred an exodus of foreign capital. On Tuesday alone, some $1.2 billion fled the country. "More than just representing a new political reality, the new exchange band was a response to capital flight," de Goes said. Analysts said that the government was also responding to pressure from Cardoso-allied state governors who, while pledging to not declare a moratorium, had demanded that interest rates be cut. "Many states expressed an apparent support for Cardoso, but they made it clear they wanted something in return," said David Fleischer, a political scientist at the University of Brasilia, who warned that the dispute with recalcitrant governors is far from settled. As for the political implications of the departure of Franco, who is widely viewed as a chief architect of the inflation-taming Real Plan introduced in 1994, analysts said there was no cause for concern. "Francisco Lopes is more pragmatic and flexible than Franco," Fleischer said, praising the new Central Bank head's low-key demeanor as a valuable asset during times of crisis. Market analysts praised Lopes Wednesday as an administrator with solid qualifications who has credibility both within Brazil and abroad. -By Stephen Wisnefski; (55-11) 813-1988; swisnefski@ap.

To: Steve Fancy who wrote (11603)	1/13/1999 7:56:00 PM
From: David Petty	Respond to of 22640

Sorry guys, already more than factored in: Wednesday January 13, 6:18 pm Eastern Time RESEARCH ALERT - Merrill cuts Latin American banks (excerpts) BRAZIL: Banco Bradesco from buy/buy to neutral/accumulate; Banco Itau from buy/buy to neutral/neutral; and Unibanco from accumulate/accumulate to neutral/neutral.