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

To: Steve Fancy who wrote (12177)	1/21/1999 2:28:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's Cardoso sees strong signs of confidence Reuters, Thursday, January 21, 1999 at 14:12 BRASILIA, Jan 21 (Reuters) - Brazilian President Fernando Henrique Cardoso said Thursday that he saw strong signs of investor confidence following changes in the country's foreign exchange policy. "At the same time there have been some understandable concerns in relation to changes in foreign exchange rules, I've felt...very strong signs of confidence in the country," Cardoso said. Cardoso spoke at the presidential palace after U.S. telecom giant Sprint Corp. (NYSE:FON) announced it will invest $2 billion to develop a competing long-distance carrier in Brazil, after winning the concession last week. "Given that there are still people who don't understand the (forex) changes, people ask could this affect belief in the country, belief in our development?," Cardoso said. "The answer is clearly no. The investment announcement made today, of $2 billion, shows very clearly that the power is in our hands to advance." The Central Bank announced Monday that it will cease to defend the currency, letting it float freely against the dollar. The real has tumbled 30 percent against the U.S. currency since last week when trading controls were eased. Copyright 1999, Reuters News Service

To: Steve Fancy who wrote (12177)	1/21/1999 2:30:00 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

Cardoso must not have yet caught up with the news on the real yet today. sf

To: Steve Fancy who wrote (12177)	1/21/1999 3:21:00 PM
From: Steve Fancy	Respond to of 22640

Weaker Real Seen Boosting Brazil Exports Later This Year By JAMIE MCGEEVER Dow Jones Newswires RIO DE JANEIRO -- The rapid depreciation of the Brazilian real against the dollar this month should boost the country's exports - but probably not until mid or late 1999, analysts say. "Exports will probably start to grow in four to six months, but it also depends on global growth," said Silvio Camargo, economic analyst for Banco Fator in Sao Paulo. Camargo predicted the cheaper real (BRR) ($1=BRR1.59, Wednesday's open) could spur 8% export growth in some sectors this year while the stronger dollar could cut imports by 5% - translating into a rough trade surplus of around $1 billion. Analysts said most of the trade turnaround will probably be posted in the second half of 1999 - with immediate prospects blunted by political uncertainty, market volatility and economic recession. "Both exchange and interest rate variables have yet to find their equilibrium levels, and may change a lot in the next few weeks," said Marcelo Allain, economist with bank BMC in Sao Paulo. By Wednesday's close, the real had lost around 24% against the dollar since Jan. 13, when Brazil widened its trading band before confirming Monday it was adopting a free-float foreign exchange regime. A more competitive real could help turn around last year's $6.43 billion trade deficit. Exports in 1998 totaled $51.12 billion, alongside $57.55 billion in imports. In an early sign of renewed export activity despite the recent market turmoil, advance credit notes or ACCs totaled $146 million Tuesday - the highest tally since Jan. 11. ACCs, as they are known locally, are used by Brazilian companies to obtain credit advances from banks after securing dollar-based export contracts. BMC's Allain said the real's devaluation should help cushion Brazilian exporters from falling commodities prices in the global arena. "Brazilian producers' revenue (in reals) will increase considerably, which will boost production of sugar, coffee and orange juice," he predicted. Dollar-quoted coffee and sugar prices - two Brazilian export staples - fell 7% Tuesday in commodities trading in Chicago, according to Allain. A more competitive real isn't enough, though, analysts quickly added. Allain and Camargo said Brazil's government must now strive to restore credibility in its battered economy - which they both see entering a deep recession in the first quarter. To do that, Brazil will have to get its fiscal house in order - and that still hinges on legislative approval of a series of fiscal reforms authored by President Fernando Henrique Cardoso. "It's now fundamental the government stabilizes the fiscal anchor, which has replaced the exchange anchor," Camargo said, adding that a reduction in interest rates, a steadier currency and lower capital outflows all hinge on the fiscal plan goals being met. The central bank has hiked its key interbank overnight lending rate in recent days to defend against real outflows. The rate stood at 32.50% Wednesday, up from 29.80% Friday. Brazil's recent export performance has meanwhile been less than stellar. During the second half of 1998, exports fell 10.8% from the year-earlier period. Overall, exports fell 3.5% and imports contracted 6.2% in 1998 from the previous year. -By Jamie McGeever (5521) 580-9394; jmcgeever@ap.org (Stephen Wisnefski in Sao Paulo contributed to this article) Dollar-quoted coffee and sugar prices - two Brazilian export staples - fell 7% Tuesday in commodities trading on the Coffee, Sugar & Cocoa Exchange (CSC) in New York, according to Allain. (In the item "=Weaker Real/Brazil Exports -2: Cushion Fall In Commodities," which was published around 1451 GMT, the location of the commodities exchange was misstated.)

To: Steve Fancy who wrote (12177)	1/21/1999 3:23:00 PM
From: Steve Fancy	Respond to of 22640

CORRECTION: Brazil Vote Was Acid, Not Asset, Test Dow Jones Newswires Wednesday's vote "was an acid test which has now been met. It was a striking example of the politicians rallying around the flag and doing what is right," says Arturo Porzencanski, Latin America economist for ING Barings in New York. (In "=Foreign Investors Ask Brazil For More As Real Plunges," which ran about 1938 GMT, an incorrect word had been used instead of "acid" in the quote from Porzencanski.) A Congress full of President Fernando Henrique Cardoso's opponents, as well as a Brazilian population already suffering from austerity fatigue, may well find demands for more sacrifices difficult to stomach. The lower house had four times previously rejected the latest reform measures, which impose social security taxes on public servants and require some retired public workers to contribute to their pension schemes. The Senate is widely expected to approve passage of the legislation when it meets next Thursday. But given that it is the political arena where many see the biggest risks, investors may now fear the government is tempted to rest on its laurels. Although Wednesday's vote means the fiscal austerity package in which the International Monetary Fund has placed so much stock is now "practically in place," the government may need to make major gestures to boost confidence, argues ING Barings' Porzencanski. "The government has been on the defensive in recent weeks ... but now it may have to take the psychological advantage. The best defense is offense," he said. Indeed, an important lesson from last year's Asian financial crisis is that confidence is key. Unfortunately for Brazil, a few negative developments Thursday went right to the heart of foreign investor confidence. For one, influential financier George Soros told reporters he thinks IMF advice for Brazil to keep interest rates high is flawed. Interest rate issues directly affect the Brazilian real market, where many short-term participants are holding the local currency for the high yield which tight monetary conditions promise them. The Brazilian Central Bank kept its overnight bank lending rate Thursday at a lofty 32.5%, the level to which it was raised Tuesday. But such high rates impose a heavy burden on stock and bond markets and must eventually come down if the economy is to be allowed to recover. The question is: when? Too soon, when confidence remains poor, and the real will fall. Congress' contribution Wednesday to the push to improve fiscal balances "allows the central bank to reduce interest rates," argues First Union's Bryson. "But as they start to reduce interest rate, the real is going to fall. It won't be as attractive as it was before." --------------------------------------------------------------------------------

To: Steve Fancy who wrote (12177)	1/21/1999 3:26:00 PM
From: Steve Fancy	Respond to of 22640

Deputy USTR Fisher:Brazil Discipline Is Tough, Encouraging Dow Jones Newswires WASHINGTON -- Richard Fisher, Deputy U.S. Trade Representative, said Thursday that the discipline displayed so far by the Brazilian government in its handling of the current market crisis is "tough, strong and encouraging." Addressing the Chamber of Commerce, Fisher said he also welcomes comments by Brazilian President Fernando Henrique Cardoso that he will seek to keep prices down by reducing tariffs if such steps prove necessary. The senior trade official described Cardoso as a "well respected and cherished friend of the U.S." Fisher reiterated U.S. administration comments that Brazil must carry forward the implementation of a strong and credible program for economic and fiscal reform for it to emerge successfully from the current crisis. He added that with several governments in the South American region likely to see new presidents in near-term elections, stability in Brazil is all the more important to maintain investor confidence in the region. Fisher said that "present indications are not only that President Cardoso is up to the test ... but that he welcomes it."

To: Steve Fancy who wrote (12177)	1/21/1999 3:28:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil real closes 7.6 pct weaker at 1.72/dlr Reuters, Thursday, January 21, 1999 at 15:03 SAO PAULO, Jan 21 (Reuters) - Brazil's real currency slumped 7.6 percent against the dollar in volatile trade Thursday to close at 1.72 to the dollar, traders said. The currency extended already sharp losses on concern capital flight is draining the market's dollar inventories and amid speculation that Brazil's woes could spread to other countries. The real has fallen in value by 29.6 percent since last week. Steady dollar outflows of more than $300 million a day sparked concern that the stock of dollars held by banks will eventually dry up. Traders said they expect dollar outflows to reach $400 million Thursday once all operations are added up. As of 1745 local/1945 GMT, a net $196 million had flowed out of forex markets. The Central Bank announced Monday that it will no longer intervene in the forex market to defend the real, letting it float freely against the dollar instead. In the commercial forex market the real closed 7.6 percent weaker at 1.76 to the dollar. In the floating forex market, the real weakened 10 percent to 1.80 to the dollar and in the parallel market the real slumped 9.44 percent to 1.8 per dollar. Copyright 1999, Reuters News Service