Brazil Stocks Suffer Worst Fall Since 2001. Crisis Will Make Us Stronger, Say Authorities

Brazil's Bovespa Brazil is telling Brazilians and the world that there's no reason for panic in the wake of the latest Wall Street meltdown, which saw the bankruptcy of 159-year old financial giant Lehman Brothers and the buying out of Merril Lynch by Bank of America for liquidation price.

The president of the Brazilian Central bank, Henrique Meirelles, said this Monday, September 15, that Brazil is monitoring the international financial crisis carefully. "Brazil is ready to tackle an adverse situation of the international markets," Meirelles stated during a press conference in São Paulo. "Brazil's Central bank is in permanent contact with foreign central banks monitoring everything very carefully."

The Bovespa, São Paulo's stock exchange, with a trading volume of 6.571 billion reais (US$ 3.634 billion) closed Monday's trading session with a 7.59% loss, the largest decline since September 11, 2001, when the Bovespa index, the Ibovespa fell 9.17%.

The stock exchange closed at 48,416 points after having opened at 52,386 points. The Bovespa index has fallen 13,05% this month and 24.21% during the year. The dollar, on the other hand, went up 1.85% closing the day at 1.8140 reais per dollar.

Price reductions of raw material important for the Brazilian industry and losses of the bank sector were the main factors that dragged the Bovespa index down.Oil multinational Petrobras (-9.69%) and mining firm Vale (-9.86%) were the companies whose stocks fell the most.

Brazil's Finance minister, Guido Mantega, warned investors to avoid taking hasty decisions due to the sharp decline of the Brazilian stock exchange.

"Investors and bank client, should do nothing. They should leave everything the way it is because everything will be back to normal," Mantega told reporters soon after the closing bell rang.

"This is not the time for rashness, even because the Brazilian economy is sound. There is much fluctuation in this moment of crisis, fluctuations that will go back to normal later."

According to Mantega, "Brazil is a safe harbor" amidst the international crisis, since its economy is strong. He reiterated forecasts that the country will grow 5.5% this year and 4.5% in 2009,

"Brazil will be one of the economies that will be strengthened by this crisis, while other countries will be weakened,"  stated the minister.

As for the dollar hike, Mantega said that Monday's increase was not substantial. "The dollar gain was small," he noted, "This shows that there is not an impetus for the dollar to go up."

Mantega also believes that Brazil's growth won't be stunted by the falling prices of commodities and  the flight of foreign investors from the Brazilian stock market. The minister, however, thinks that the Lehman Brothers bankruptcy means the American financial crisis is getting worse:

"This was an important financial institution. Other institutions will also suffer some fall or will have bigger losses. This means a longer, more prolonged, more profound crisis of the American economy."

And he added: "The trouble is there, not here, We've been enduring a financial crisis for more than a year now."

Tags:

You May Also Like

Industry Revises Brazil’s Growth Up. GDP Expected to Grow 3.7%.

Brazil’s National Confederation of Industries (CNI) has increased its forecast for the growth of ...

Brazil: The Cruel Rite of Churrasco

The Brazilian tradition of churrasco is a lamentable example of mere human selfish gluttony. ...

Lula Rushed to Hospital While Getting Ready to Fly to Davos

The president of Brazil Luiz Inácio Lula da Silva was undergoing tests in the ...

Best-seller Books, Plays and Movies

By Brazzil Magazine RIO Buda (Buddha)—Comedy. Decided to get a man she loves, a ...

Latest Casualty of Brazil’s Air Tragedy: the Defense Minister

It took three full days since Brazil's deadliest air accident for the Brazilian President ...

Regulatory Shock

Debate Goes OnBy Brazzil Magazine The two most cogent reasons for the 50 percent ...

Indy 500: Boys from Brazil Raring to Win

Mark your calendars for May 25th. Penske, Toyota position Hélio Castroneves for three-peat at ...

Africa and Brazil Call for an End to All Trade Barriers by US and EU

African and South American Trade ministers met last week in Marrakech, Morocco, to discuss ...

In Brazil, Yellow Fever Scare Brings Fear of an Epidemic

Brazil's Health Minister, José Gomes Temporão, used a radio and TV pool this Sunday, ...

Brazil’s Petrobras Gets US$ 20 Billion Profit in 2010, a Record

Brazil state-controlled oil and gas multinational Petrobras, Latin America’s biggest company, announced it raked ...