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Brazil’s Petrobras Stocks Fall 24% in Two Months While Real Zooms Up

According to Economática, a Brazilian consultancy firm, oil multinational Petrobras saw its stocks fall 23.6%, from 472 billion reais to 361 billion reais, losing 111 billion reais, between June 1st and July 30.

During the same two-month period another Brazilian blue chip, the mining company Vale, lost 56 billion reais, with its shares dropping from 295 billion reais to 239 billion reais, a 19% devaluation.

The decline continued this Thursday, July 31, for both companies, at the last trade session of the month in the São Paulo Stock Exchange, the Bovespa.

While the Petrobras stock closed at 43.94 reais, an 1.5% drop, the Vale share lost 1.58% ending the month at 47.34 reais. The real continued strong being sold at 1.56 reais per dollar.

Why the sharp decline? Experts see two main reasons: the first is the fact that Petrobras and Vale are linked respectively to oil and iron, two commodities that have been going up for some time and now seem to have hit a ceiling. A second reason is due to the foreign investors who started to withdraw their money to what they consider safer havens.

The United States dollar depreciated 55.4% against the Brazilian real from December 31, 2002 to July 25, 2008, a period that encompasses the first and part of the second term in office of president Luiz Inácio Lula da Silva. The data were disclosed by Einar Rivero, director of Economática.

According to him, of the eight regions surveyed by the firm, Brazil was the one in which the dollar depreciated the most, followed by Colombia, which recorded a 38.1% variation during the same period.

Venezuela was the only nation surveyed in which the United States currency appreciated. According to Economática, the Venezuelan fixed the exchange rate several times since 2003.

In 2008, Colombia was the country in which the dollar depreciated the most, by 12%, followed by Brazil, with a variation of 11.1%. According to Rivero, the depreciation of the dollar shows the strength of the currencies in the locations surveyed: Mexico, Eurozone, Peru, Argentina, Chile, Brazil, Colombia and Venezuela.

The Brazilian real was the currency that appreciated the most against the dollar, 124.2% since December 31, 2002, followed by the Colombian currency, at 61.6%, and by the euro, at 50%.

Next: Brazil Rushes to Heal Wounds After WTO Talks Collapse in Geneva
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