Brazil's finance Minister, Guido Mantega, at the request of Henry Paulson, the US Treasury secretary, has called for a meeting this coming Saturday, October 11, of the G20, a group composed of the rich countries of the G7 plus the European Union, Australia, China, India, Brazil, Argentina, Mexico, Russia, Indonesia, Saudi Arabia, South Africa, South Korea and Turkey.
Mantega, who is the current president of the G20, was expected to travel to Washington this Wednesday to participate in the annual meetings of the IMF and the World Bank. Henrique Meirelles, the president of Brazil's Central Bank, will also be in Washington for the meeting and encounters with investors.
Paulson suggested the gathering of G20 Finance ministers and Central Bank chiefs as a way to discuss other options to deal with the world's financialÂ meltdown. In a note to the press Mantega wrote: "The goal is to discuss the aspects of the world financial crisis and its impact on the global economy."
The Brazilian Foreign minister, Celso Amorim, suggested that the Brics (Brazil, Russia, China, India and South Africa) operate in a coordinated fashion in order to fight the effects of the global crisis.
"I think this is very important," he noted, "and this crisis drives home the need to coordinate with other emerging economies, such as, the so-called Brics. We have a growing huge trade with these countries, however,Â we cannot leave it at the mercy of credit difficulties that can originate from rich countries' problems."
The Bovespa, Brazil's stock exchange fell for the 5th day in a row, this Wednesday, October 8, accumulating losses of 23% in October alone. The Ibovespa, the Bovespa index slipped 1,546. points or 3.9%, closing at 38,593.54, this Wednesday.
Meanwhile the real, the Brazilian currency, declined as much as 10% against the US dollar during the day reaching 2.45 reais a dollar before recuperating and closing at 2.272 reais, a 1.73% drop.
Latin American markets finished sharply lower on Tuesday under pressure from the slide on Wall Street, falling commodity prices and uncertainty about the future. Growth forecasts have also been downgraded.
Brazil's Bovespa fell 4.7% to 40,139.85, for the fourth time in a row. It was the first close under the 41,000-points level since May 2006.
Mexico's IPC declined 4% to 20,884.74 for its first finish under 21,000 since September 2006. It has closed lower for fourth straight sessions.
Argentina's Merval fell 2.7% to 1,384.60, the lowest since July 2005 having accumulated losses of 8.47% in two days. Chile's IPSA tumbled 4.3% to 2, 345.22, while the US dollar kept approaching the 600 Pesos benchmark.
The Brazilian real remained under pressure with the US dollar gaining as much as 5.7%, pushing it down to its lowest level in two years. The dollar against gained against the Mexican Peso by 4%.
On Wall Street, the Dow industrials (DJI) crumbled 508 points to 9,447.11 after investors turned its focus from the Federal Reserve's entrance into the commercial paper to ease frozen credit markets, to minutes from the central bank's meeting in September that showed that rate policymakers set aside rate cuts.
Bernanke said Tuesday that commodity prices are likely to move even lower because of the global economic slowdown
Given the dependence of the region on commodity exports experts are downgrading economic forecasts for a number of LatAm economies. Brazil is expected to expand 3% instead of 3.5% just a couple of weeks ago. Mexico’s outlook was cut to 1.7% from 3.2%; Argentina to 2.5% from its previous forecast of 4.4%; and Chile to 3.2% from 4.2%.