Tuesday, October 21, 2008

Brazil Currency Takes a Tumble

Brazil stocks, currency hit by global jitters
Tue Oct 21, 2008 4:48pm EDT

Brazil's currency takes a fall. We need to monitor this currency as it is an important consideration.

SAO PAULO, Oct 21 (Reuters) - Brazilian stocks eased on Tuesday, as investors took profits on the previous day's rally, while the real slumped against the dollar despite central bank measures to boost liquidity.

Brazil's main stock index, the Bovespa .BVSP, fell 1.01 percent to 39,043.39 after losing as much as 3 percent.

Oil company Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz) led losses as crude prices dropped while ongoing financial worries inspired investors to cash in on more than 8 percent gains made in the previous session.

"It's volatility. Things in general are improving abroad. We see Libor rates falling ... this means a little improvement in money markets," said Cristiano Souza, economist at Banco Real in Sao Paulo.

"Even so, we haven't yet returned to the conditions at the end of August, before Lehman Brothers had collapsed," he said.

Interbank lending rates were fixed lower earlier, fueling a belief that government rescue plans were beginning to free up frozen money markets. U.S. stocks meanwhile fell on worries over earnings and the profit outlook as the slowing economy sapped business and consumer demand.

Brazil's currency, the real BRBY, plummeted 5.32 percent to 2.238 per dollar, as the U.S. currency hit a 1-1/2-year high against a basket of currencies, fueled by demand from banks for funding needs.

On the stock market, Petrobras fell 1.54 percent to 25 reais, after falling 3.9 percent earlier in the session. Steelmaker CSN (CSNA3.SA: Quote, Profile, Research, Stock Buzz) fell 5.81 percent to 30.14 reais while Gerdau (GGBR4.SA: Quote, Profile, Research, Stock Buzz) shed 2.53 percent to 14.62 reais.

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