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

To: md1derful who wrote (15263)	5/13/1999 10:23:00 AM
From: wl9839	Read Replies (1) \| Respond to of 22640

Brazilian Real Gains, Interest Rate Futures Dive on Central Bank Rate Cut Sao Paulo, May 13 (Bloomberg) -- The Brazilian currency rose and interest rate futures dove after the central bank cut its benchmark rate for the second time in a week, stoking confidence a revival in Latin America's biggest economy may lure investors. The real strengthened 0.4 percent to 1.65 from 1.6560 yesterday. Interest rates plunged in the futures market, with the most active contract projecting a rate of 22.44 percent for July, down 180 basis points from yesterday's close. ''There was a strong inflow of dollars'' yesterday, said Ronald Guimaraes, a currency trader at Banco Bozano Simonsen in Rio de Janeiro. He said the central bank's move to cut rates last Friday then again yesterday is unlikely to have much of an effect on the currency unless it leads to a difference in capital flows. Gains could be capped, though, as some investors see that the Brazilian central bank has established a level of 1.65 reais per U.S. dollar as an informal floor for the currency, Guimaraes said. Helping to boost the currency was yesterday's sale of 300 million reais ($180 million) in dollar-linked debt, a move aimed at giving investors a hedge against possible weakness in the real. Sale of such bonds tends to reduce pressure on the real in the spot market, Guimaraes said. The real was also little changed in the futures market, with the most active contract projecting the currency at 1.6680 reais per dollar by the end of this month. The rate cut also helped strengthen the Brazil C Bond, which rose 1.5 percent to 68.813, while its yield fell 25 basis points to 13.94 percent. ------------------------------------------------------------------------ © Copyright 1999, Bloomberg L.P. All Rights Reserved.