Brazil Stocks Suffer Worst Fall Since 2001. Crisis Will Make Us Stronger, Say Authorities

Brazil's Bovespa Brazil is telling Brazilians and the world that there's no reason for panic in the wake of the latest Wall Street meltdown, which saw the bankruptcy of 159-year old financial giant Lehman Brothers and the buying out of Merril Lynch by Bank of America for liquidation price.

The president of the Brazilian Central bank, Henrique Meirelles, said this Monday, September 15, that Brazil is monitoring the international financial crisis carefully. "Brazil is ready to tackle an adverse situation of the international markets," Meirelles stated during a press conference in São Paulo. "Brazil's Central bank is in permanent contact with foreign central banks monitoring everything very carefully."

The Bovespa, São Paulo's stock exchange, with a trading volume of 6.571 billion reais (US$ 3.634 billion) closed Monday's trading session with a 7.59% loss, the largest decline since September 11, 2001, when the Bovespa index, the Ibovespa fell 9.17%.

The stock exchange closed at 48,416 points after having opened at 52,386 points. The Bovespa index has fallen 13,05% this month and 24.21% during the year. The dollar, on the other hand, went up 1.85% closing the day at 1.8140 reais per dollar.

Price reductions of raw material important for the Brazilian industry and losses of the bank sector were the main factors that dragged the Bovespa index down.Oil multinational Petrobras (-9.69%) and mining firm Vale (-9.86%) were the companies whose stocks fell the most.

Brazil's Finance minister, Guido Mantega, warned investors to avoid taking hasty decisions due to the sharp decline of the Brazilian stock exchange.

"Investors and bank client, should do nothing. They should leave everything the way it is because everything will be back to normal," Mantega told reporters soon after the closing bell rang.

"This is not the time for rashness, even because the Brazilian economy is sound. There is much fluctuation in this moment of crisis, fluctuations that will go back to normal later."

According to Mantega, "Brazil is a safe harbor" amidst the international crisis, since its economy is strong. He reiterated forecasts that the country will grow 5.5% this year and 4.5% in 2009,

"Brazil will be one of the economies that will be strengthened by this crisis, while other countries will be weakened,"  stated the minister.

As for the dollar hike, Mantega said that Monday's increase was not substantial. "The dollar gain was small," he noted, "This shows that there is not an impetus for the dollar to go up."

Mantega also believes that Brazil's growth won't be stunted by the falling prices of commodities and  the flight of foreign investors from the Brazilian stock market. The minister, however, thinks that the Lehman Brothers bankruptcy means the American financial crisis is getting worse:

"This was an important financial institution. Other institutions will also suffer some fall or will have bigger losses. This means a longer, more prolonged, more profound crisis of the American economy."

And he added: "The trouble is there, not here, We've been enduring a financial crisis for more than a year now."

Tags:

Ads

You May Also Like

Why Is Brazil Afraid Vice Alencar Will Become President?

A common denominator unites all the political, business and union forces in Brazil: the ...

Iraq Wants Brazil Participation in Country’s Reconstruction Effort

Iraq is planning to build 3.5 million popular housing units in seven years and ...

Brazil Threatens Severe Punishment to Anyone Growing GM Corn

The prodution of genetically modified (GM) corn (milho transgênico – transgenic corn) is strictly ...

Criminals Have Already Killed 90 Policemen in São Paulo, This Year

Brazil announced on Tuesday it will create a new police agency, boost surveillance operations ...

Only a Federal Program Can End Brazil’s Big Fraud and Educational Shame

Whenever anyone asks for an explanation of the educational shame in one of the ...

Malba Tahan, the Brazilian Who Made Algebra Fun

His name was Júlio César de Mello Souza but he was better known as ...

Wallerstein on Brazil’s Surge and the Decline of the US Empire

In the course of his visit to the Southern Cone of South America, the ...

Swiss JetBird Orders Up to 100 Jets from Brazil’s Embraer

Embraer announced that Geneva-based JetBird has acquired 50 Phenom 100 jets and has placed ...

Planning a Planetary Zero Hunger in Brazil

The war on hunger is one of the themes that will be discussed at ...

Brazil’s Shout of the Excluded Celebrates 10 Years of Protest

The demonstrations at the 11th Shout of the Excluded March, with this year’s  theme ...