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Brazil’s Black Monday Brings Market Down 5.43% and Dollar Up 7.53%

Brazil's Bovespa It was another black Monday in the Brazilian stock market, this October 6. São Paulo's stock exchange, the Bovespa, had to be closed twice after the Ibovespa index fell 10% and then 15%. Things only calmed down a little after Brazilian Finance minister, Guido Mantega, showed up for a press conference.

The Bovespa ended up closing at 42.100, a 5.43% slump, the lowest level since March, 5. 2007. The commercial dollar went up 7.53%, closing at 2.20 reais for sale, the highest value for the American currency since September 2006.

The Bovespa's rules call for the "circuit breaker" to be activated to calm the market every time there's an oscillation that is 10% up or down. If the market then falls 15% in the same trading session the session is closed again for a whole hour. The first stop occurred from 10:18 am to 10:48 am. The second one happened between 11:44 am to 12:44 pm.

According to the Bovespa press office, this was the third time in the stock exchange's history that the markets had to be interrupted for an hour. The first time happened on October, 28, 1997 and the second one on September 10, 1998.

In his press conference Mantega, announced measures to help small banks and exporting together with the injection of US$ 1,47 billion in the market by Brazil's Central Bank.

The Brazilian government intends to use money from its international reserves to guarantee credit in dollars to Brazilian exporters and to help to relieve the exchange rate pressure. Furthermore, the BNDES (National Bank of Economic and Social Development) is stepping up it credit lines to finance exports.

The first measure should work as a loan in dollars. The Central Bank promises to buy banks securities overseas and pay them with Brazil's reserves. It will be like a loan in dollars with a contract of repurchase by the loan takers. As explained by Central Bank chief, Henrique Meirelles:

"It's a credit line in dollars overseas using our reserves. It will be a purchase of securities by the Central Bank, therefore a sale of private banks' securities abroad, with a contract of repurchase."

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  • Show Comments (1)

  • ch.c.

    What a great day….these Mondays Fire Sales Street Markets!!!!!
    Not later than 6 months ago, at the peak prices, some basic grains such as rice, wheat, corn, where banned for exports from the emerging nations producers, in the hope of STILL HIGHER PRICES !!!!
    Some of those countries who banned exports on one or more type of grains were…..
    Brazil, Russia, India, but not China…if I am not too wrong !
    The same is true for Argentina, Pakistan, Egypt and also other emerging countries!!!!

    Who took then the most severe beating since then on their combined Equities & currencies depreciations ?
    simple……Brazil, Russia and India.
    And the others countries mentionned above as well !!!

    Lets face it, YOU DONT CARE ABOUT THE WORLD HUNGER for your surplus grains production !!!!!!!!!
    Lets face it, despite being a surplus FOOD producer in a least one of the grains stated above, YOU DONT EVEN CARE ABOUT HUNGER IN YOUR OWN COUNTRY !!!!!!!

    Hopefully you understand that will end up costing you far more that what you can even think of !!!!!

    It wont be said the “diplomatic” way. It wont be said the “non-diplomatic” way !
    But you are going to feel the pinch, without you even understanding the why, how and from where !

    Because you did not want to sell at a good price for you, now the developed world is going to do whatever it takes, to have Food prices MORE AFFORDABLE…THE WORLD OVER……INCLUDING IN THE DEVELOPED, EMERGING AND THIRLD WORLD NATIONS !!!!!

    You wanted a price WAR by having the developed nations delocalize productions of HIGH value added goods transferred to your countries to benefit YOU : to have LOWER prices in YOUR COUNTRIES BUT ALSO BENEFITTING YOUR EXPORTS !
    You did to some extend the opposite, by creating a NON existent shortage of various Commodities to get a HIGHER prices…ALSO FOR YOUR EXPORTS !!!!

    Try to wake up now. Your filthy games and tricks are going to be over !!!! GUARANTEED !
    Since July you already got some missiles that exploded in your underpants !!!
    But they were only the first series of much larger and bigger still to come.

    As I said, no one will know or understand why, when and how they will come….and explode in your underpants.

    We gave you one more chance for years with our financings,investments, know how, technologies, R&D and expertises. You cheated and betrayed as you already did more than once in past decades !!!!!

    You will have very hard times for years to come. A few of you will go bankrupt….just as in the past !

    You went too far ! Now we will force you to go back below trend…for compensation !!!!!

    Hopefully you did good shoppings today in the world exchanges equities markets….as good as I did.
    But no doubt in my mind….I will exit first the emerging nations investments during the next tradable rally that should not be too far away, to re-invest the proceeds in the developed countries.

    Longer term your stocks markets will basically do the same as those in the developed countries, but not so for your local currencies !!!!!
    I keep laughing for hours for a year when I have read hundreds and hundreds of times from the emerging nations medias how WORTHLESS is the US$, when in fact ALL OF YOUR CURRENCIES LITERALLY COLLAPSED OVER SEVERAL DECADES AGAINST THE CURRENCY YOU DEFINE AS WORTHLESS !!!!!

    Junkies will remain Junkies. Idiots will remain Idiots. So far nothing new…yet !

    😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉

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