In Brazil Stocks Drop Sharply While Dollar Zooms Up

São Paulo, Brazil's stock market, the Bovespa The dollar shot up 3.27% this Thursday, July 26, in Brazil, closing at 1.928 in relation to the real. This was the American currency's biggest value since May of last year. The sudden and brisk surge is being attributed by analysts to investors getting bearish on their riskier stocks and taking their money elsewhere. This is a phenomenon occurring all over the world right now.

When any factor stirs investors fear, as it happened this Thursday, they react running from emerging markets like Brazil and taking their money to investments they consider more secure, like US government securities.

The Ibovespa, the São Paulo stock exchange index, fell sharply declining more than 6% during yesterday's trading session and closing 3,57% down at the end of the day. This Thursday's slump was enough to wipe out the 7% in gains the Bovespa had brought this July.

The explanation for this market malaise is the world's concern with a possible crisis in the United Sates, which would reduce the amount of money circulating through the international finance markets.

6.3 billion reais (US$ 3.4 billion) in shares changed hands, well above the year's daily average of 4.1 billion reais (US$ 2.2 billion). Yesterday's result was the year's third worst drop for the Brazilian financial market.

On July 24, the Ibovespa had fallen 3.86% also in response to the American economy. The largest drop, of 6.62%, happened on February 27, in this case in reaction to a big slump at Shanghai's stock market, which reverberated throughout the world.

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