• Categories
  • Archives

Bet on Weak Dollar Brings Brazil Firms Billion-Dollar Losses

Dollars The Brazilian central bank left the basic Selic interest rate unchanged for the first time in six months. Brazil's Copom monetary council led by Henrique Meirelles voted unanimously to keep the benchmark interest rate "for the moment" at a two-year high of 13.75%.

The bank's decision during what it called "an environment of greater uncertainty" comes after investors pulled capital out of Brazil over the past two months, sending stocks and the currency Real plunging 24%, since its August peak. Growth is forecasted to fall to the lowest since 2003.

On Wednesday also the US Federal Reserve announced a swap line of US$ 30 billion to help boost liquidity in Latin America's largest economy.

The real, the Brazilian currency, drop to the lowest in three years is also saddling companies with huge losses. Aracruz Celulose SA and food processor Sadia SA posted combined losses of at least US$ 2 billion on bets the real would continue a four-year rally against the dollar.

But even as the Brazilian economy slows the weakening currency is reviving inflation with the benchmark IPCA inflation index climbing to 6.25% in September from 6.17% in August. The government's target for the year is 4.5%.

Consumer, construction and wholesale prices as measured by the IGP-M-index accelerated in October rising by 0.98% from a month ago, reported the GetΓΊlio Vargas Foundation on Thursday. The increase was particularly intense for the US dollar priced raw materials, 2.09%.

Companies are slashing output in advance of an expected economic slowdown from falling commodity prices and reduced lending. Bradesco Corretora, the research arm of Brazil's largest non-state bank, said growth in 2009 may slow to 2.2%, less than half this year's estimated 5.2%.

French makers Peugeot Citroen and Renault SA executives said this week they expect sales to stall in 2009 as car loan costs jump, ending four straight years of record sales. Fiat SpA, the country's top carmaker, and General Motors Corp. announced early vacation for thousands of workers to trim output by as much as 10%.

More over business confidence for the next six months is running at its lowest level in three years, the National Confederation of Industry said in a survey of manufactures published October 21.

Mercopress

Tags:

  • Show Comments (2)

  • Ric

    The Week Dollar
    Yes, a constant concern, the week dollar.

  • ch.c.

    Sorr
    it is NOT these 3 losses or may be those still to come that weakened the Brazilian Currency.
    Petrobras or Cia Vale are not in EARNINGS losses but have still seen their stocks prices COLLAPSE !!!!!

    At least…NOT YET !!!!
    πŸ˜€

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Up News: Record High Job Creation and Exchange Balance Back to Surplus

In November, the Brazilian Labor minister, Carlos Lupi, announced, Brazil created 246,695 formal job ...

Brazil Submits New General to Head UN Forces in Haiti

The Brazilian government has submitted to the United Nations the name of general José ...

Higher U.S. Treasury Yields Sink Brazilian Stock Market

Latin American stocks were mixed, with Brazilian shares dipping amid concerns about rising U.S. ...

Brazil Approves Genetically Modified Cotton Under Protest

A ruling made last week in Brazil has authorized the planting and sale of ...

Social Issues Are Not Priority in Brazil, Says Brazilian Group

After accompanying accusations of human rights violations for two years in 15 Brazilian states ...

Christmas Season Doesn’t Bring More Jobs to Brazil

Unemployment in Brazil remained unchanged in October at 9.6% compared to the previous month, ...

Brazil Promises Light for All by 2008

Brazil’s "Light for All" program will provide electricity for more three million Brazilian this ...

Growth Is Not Development and Brazil Is Proof of It

Once again Latin America is confusing development with economic growth, and economic growth with ...

In Brazil, the One-Tongued Is King

Never in the whole history of the Brazilian Republic has a President uttered so ...

43 Countries Gather in Brazil to Promote Ecological and Peace Tourism

Between November 29 and December 2, roughly 5,000 people, including entrepreneurs, professionals, scholars, students, ...