Brazil is having an extreme case of bearishness. São Paulo stock exchange's main index, the Ibovespa, following the lead of European and Asian markets fellÂ 6.6%, the biggest decline since February 27, 2007, when it dropped 6.63%.
The Bovespa closed with its primary index at a low 53,709 points, the lowest level since September 12 of last year. The Brazilian stock market has already lost 15.93% of its value since January 1st.
The Brazilian real went the same way of the stock market. The dollar had a 2.46% appreciation on the day closing at 1.830 reais for a dollar.
The Ibovespa fell from 63,886 points at the end of 2007 to 53.709 this Monday. 6.1 billion reais (US$ 3.41 billion) were traded during the day. At the worst point the Ibovespa fell 6.99%.
Among the weightiest companies in the Ibovespa's composition and favored amidst foreign investors, Petrobras fell 7.42% to 66.47 reais; Vale do Rio Doce retreated 11.35% to 41.55 reais; and Bradesco dropped 3.52% to 46.10 reais.
Reacting to the panicky markets, Henrique Meirelles, the president of Brazil'sÂ central bank, told reporters in Brazilian capital Brasília that the market is reflecting the reaction to the crisis in the United States.
According to him, the market believes that the US is getting into a recession. Meirelles also said that the Brazilian central bank is monitoring the situation and will intervene in the market if it deems necessary.
"We are ready," stressed the minister, pointing that the central bank's pillars are fiscal responsibility, floating exchange and inflation target.
For Brazilian Finance Minister, Guido Mantega, the world's jumpiness might derive from the market's frustration with the tax incentive package announced by American President, George W. Bush, last Friday, January 18.
Said Mantega: "The markets are nervous, perhaps frustrated by what was announced by the Bush administration. Europe has been infected. There is, perhaps, an expectation of deterioration in the American economy, but Brazil is better prepared than ever to tackle a foreign turbulence. Our economy shows signs of vigor and vitality, activities are going well."
Brazilian exports totaled US$ 2.844 billion last week; the figure is only US$ 1 million greater than Brazilian purchases of goods manufactured abroad.
Average daily exports stood at US$ 582.5 million, a decrease of 18.1% compared with the daily average for last month. Meanwhile, imports averaged at US$ 552.2 million, a 4.3% increase over the average recorded last December.
In the accumulated result for the month, exports stand at US$ 7.573 billion and imports at US$ 7.178 billion, resulting in a surplus of US$ 396 million.
This is the equivalent of a 73.4% reduction compared with the daily average surplus for January 2007, and of 83.3% compared with the daily average for December, according to a bulletin disclosed by the Brazilian Ministry of Development, Industry and Foreign Trade.