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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (1223)	2/3/1999 7:06:00 PM
From: X Y Zebra	Respond to of 3536

Is it really that different than if Soros himself were the new CB? Good question... How big is Soros stake in Brazil ?

To: Paul Berliner who wrote (1223)	2/3/1999 7:43:00 PM
From: Thomas M.	Respond to of 3536

Brazilian Currency Breaks Skid as Real Gains 3%; Rates Rise to 39% Rio de Janeiro, Feb. 1 (Bloomberg) -- Brazil's currency snapped an eight-day skid and interest rates rose after billionaire investor George Soros and a senior Citigroup Inc. banker said the real had fallen too far. The Brazil real strengthened 3.4 percent to 1.98 reais to the dollar. The central bank raised the overnight rate to 39 percent from 37 percent in an effort to shore up demand for the currency, which fell 40 percent since the Jan. 13 devaluation. ''I think we're seeing an overshooting in the devaluation of the exchange rate similar to Mexico in 1994-95 after they floated the peso,'' said William R. Rhodes, vice chairman of Citigroup's Citibank, in an interview during the annual meeting of the World Economic Forum in Davos, Switzerland. Brazil officials met over the weekend with the International Monetary Fund, sponsors of a $41.5 billion bailout plan approved in December. The IMF visit is expected to outline ways Brazil can meet the budget-cutting conditions of the bailout agreement, paving the way for the release of $9 billion. A new exchange rate policy is expected later this week, according to local press reports. Soros ''The currency is, if anything, undervalued,'' Soros told a press conference during the annual meeting of the Wold Economic Forum. He added that because Brazil has carried out most of the needed fiscal reforms, the Group of Seven countries should team up with private commercial banks and act as a global ''lender of last resort'' to the country, putting into practice an idea that has been widely debated over the last year. ''This actually is the perfect moment to put this idea of lender of last resort into practice,'' Soros said. ''Interposing a wall of money would stabilize the situation.'' In the futures markets, the real futures contract for March delivery, the most actively traded currency futures contract on the Sao Paulo BM&F futures exchange gained 0.84 centavo to 1.895 reais to the dollar. In the interest rate futures market, the overnight interest rate contract for March delivery, the most actively traded interest rate futures contract, fell 76 basis points to 58.13 percent from 58.9 percent.

To: Paul Berliner who wrote (1223)	2/4/1999 8:32:00 AM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 3536

I think it's pretty awkward and even shady for an employee of a hedge fund to become Brazil's central banker. I think it's pretty awkward and even shady for a partner of Goldman Sachs to become the Treasury Secretary of the United States. I can't quite understand why he'd want the job. I read that he used to be on the finance committee there or something - I can't quite understand why he'd want the job. I read that he used to be a currency trader there or something - it all seems like a conflict of interest that the SEC should be pulling it's hair out over - only Soros operates offshore. it all seems like a conflict of interest that the SEC should be pulling it's hair out over - only they don't have jurisdiction over currency matters nor over Presidential appointments. Picture this situation: It was much rumored over the weekend that Brazil, maybe with the help of the IMF, would intervene with $10B to support the Real, as it's pretty much widely accepted that it's fallen too far. This was the main driver behind the rally in Brazilian shares Monday & Tuesday. What if Fraga were to launch a Real-boosting intervention the day before options expire next month, and he calls Soros and tells him in advance, Soros positions himself accordingly and makes a killing. Picture this situation: It was much rumored in Sept. 98 that the Fed, maybe with the help of the BOJ, intervened in a big way with an unknown amount of money to support the Yen, as it was pretty much widely accepted that it had fallen too far. This was the main driver behind the huge rally in the Yen back then. What if just before Greenspan launched this Yen-boosting intervention, Rubin calls Goldman and tells them in advance, Goldman positions accordingly and makes such a huge killing they could call off their IPO! (Hmmm, conspiracy theorists please feel free to step up....;-) This may go on behind closed doors all the time, but the appointment of Fraga will leave the markets over-analyzing Soros' every move from now on. Is it really that different than if Soros himself were the new CB? This may go on behind closed doors all the time, but the appointment of Rubin must have left the markets over-analyzing Goldman Sachs' every move for the past six years. Is it really that different than if Jon Corzine himself were the US Treasury Secretary? Hi Paul, I wasn't making fun of you, just having some fun with the comparisons. My personal opinion is that we should allow for the possibility that most people bring high standards of ethics and integrity to their jobs, and that there are laws, oversight and punishment mechanisms for those who fall seriously short. - Daniel

To: Paul Berliner who wrote (1223)	2/4/1999 9:16:00 AM
From: Henry Volquardsen	Respond to of 3536

Hi Paul, I think it's pretty awkward and even shady for an employee of a hedge fund to become Brazil's central banker. I can understand how you might feel that way. But let me ask you this, did you have any problem with Robert Rubin being appointed Secretary of the Treasury? He was the head of Goldman Sachs. The big investment banks are as active in the speculative markets as any hedge fund. I don't have a problem with Fraga. Remember he was an advisor to the Brazilian Central Bank before he went to Soros, so it's not like he is unexperienced. Also it could be a positive to have someone with an understanding of how the market reacts having a voice in policy. It is also very common to have people moving between the private and public sectors. As far as Fraga giving Soros inside info, I am not very concerned. First off Soros is very hooked in and probably gets tremendous intelligence already without any need for special favors from Fraga. Second there is no greater or lesser risk of such leaks just because Fraga worked with Soros. I'm not saying leaks and insider info doesn't happen, just that Fraga's association with Soros doesn't post a greater risk than normal. Henry