Brazil and LatAm Rush to the Rescue of Tumbling Markets and Currencies

    US dollar

    US dollar Countries in Latin America, including Brazil, moved quickly this week to face the global financial crisis and came out with a battery of measures pumping billions of US dollars to try and contain the threat of recession.

    The region's largest economies, Brazil, Mexico, Argentina and Colombia, injected huge sums of money to protect their currencies, and further measures have been planned individually or in the framework of the G-20 scheduled to hold an emergency meeting in Washington on Saturday.

    Brazil, the region's major economy suffered a violent plunge of markets and the currency in spite of the authorities' insistence and guarantees that the country was protected from the US credit problems.

    On Wednesday the Brazilian Central Bank pumped US$ 7.7 billion into the local money market to alleviate credit restrictions and anticipated another 3 billion were ready for any other emergency. The bank also intervened three times to prop the rapidly deteriorating local currency real against the US dollar.

    No figures were disclosed about the volume involved but Brazil has international reserves totaling US$ 207 billion and on Thursday stock markets and the currency initially reacted positively.

    Mexico, the region's second economy and the most dependent on the US economy had US$ 2.5 billion on stand by to support the peso and announced an emergency plan of US$ 4.3 billion to promote the economy.

    Investments are mainly in infrastructure and "they are not a financial bail out, but are rather focused to support the internal engines that prop the Mexican economy", said president Felipe Calderon on national television.

    Calderรณn said Mexico was facing a serious drop in exports, investments, remittances and tourism income. Growth forecast for this year is down to 2% from 2.4% and to 1.8% for next year.

    Meantime in Argentina the Central Bank rescued the peso from a strong depreciation by selling US$ 3.5 billion in the market. The US dollar is at a "reasonable and controlled" level vis-รญย -vis the peso said Interior Minister Florencio Randazzo.

    Central bank international reserves dropped to US$ 47 billion and Argentine authorities said they were concerned with the 30% depreciation of the Brazilian real, since Brazil is Argentina's main trading partner.

    Foreign Affairs minister Jorge Taiana said an emergency meeting of Mercosur had been convened to analyze the global crisis and "coordinate and define positions".

    In Colombia president Alvaro Uribe announced more flexible rules for foreign capital coming into the country and proposed a fiscal amnesty for those Colombians who were intent in repatriating their monies.

    "We need to ensure liquidity, finance sources and contribute to a stable and competitive interest rate", underlined Uribe.

    However since all four countries are concerned about inflation none of the Central Banks joined the Federal reserve and the European central bank in the coordinated cut rate as happened on Wednesday.

    But again on Thursday Latin American markets were dragged at last moment by Wall Street's pessimism which after a balancing act during most trading, plunged in the last half hour 679 points, 7.33% below the 9.000 points threshold to 8.579.

    Brazil's Bovespa ended trading down 3.92% at 37.080 points in spite of having recovered in mid afternoon 5%. This is the sixth consecutive drop of Bovespa which has accumulated losses of 41% so far this year. The Central bank supported the Real with US$ 911 million.

    Argentina's Merval was down 4.99% to 1.287,33 points after having gained 3.2%. In Chile both indexes slid: IPSA 1.61% and IGPA 1.12%. But the country's risk rating remains above 1.300 points of the EMBI index.

    Finally Mexico stock exchange after an initial positive response dropped 1.78% to 20.310 points, the sixth fall running.

    Mercopress

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    • Show Comments (9)

    • dnbaiacu

      Ch.c . Thanks for the info…
      This was very good.
      ๐Ÿ™‚
      By the way,, I don’t live in Brazil right now. Will be going back. BUT with no need to “finance”anything! Trust , I know about interests rates in Brazil But it is very good to see the history of it outlined.

    • dnbaiacu

      Food for thought
      [quote]But dont worry everyone is in a meltdown for the time being. Some more than others. What you have to try to guess is…who will end up in a bigger mess than the others [/quote]
      WoooooooW…….Kinda leaves you speechless. ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ
      [quote]The loyal tax payer in the end takes the burden for everything.[/quote]

      Yes, they will pay, but not necessarily so monetarily. What’s owed is impossible to pay back. There will be a form of allegiance required. If you don’t comply , things will be just that more difficult. ๐Ÿ˜ฅ
      These “Central Banks ” know what they are doing. And the middle east is getting out of control as we speak. All the while we are distracted by a “historical election”. ๐Ÿ˜€ :D.
      Sound advice is to “simplify as much as possible. Know who your real freinds and family you can count on are. Question the purpose of your existence and SEARCH for it. Things are changing faster than most will be able to make the “personal” changes needed to survive.
      This isn’t about your money.. It is about your MIND.
      “With money, do what makes you feel powerful”
      Suzanne Orman, financial analyst.
      “Sustenance and covering, we shall be content with these things”.
      Apostle Paul
      “The valuable things of the rich are his strong town, and they are like a protective wall [b] in his imagination[/b]
      King Solomon.
      So true………

    • Falupa

      Big problem
      I hate to be doom and gloom, but this is a horrible mess. Most stock exchanges across the U.S. are really feeling the pinch. It is too bad because guess who pays it back. Yup us. The loyal tax payer in the end takes the burden for everything. Even in Brazil. It is so frustrating hearing about this in the news. I’m a little disappointed.

    • ch.c.

      It is like Boomerang. Comes back to you.
      Looks like you are too idiot to look at your own history !
      Thus far Brazil still has the World Gold Medal….for inflation ! 400 % ANNUAL AVERAGE INFLATION OVER SEVERAL DECADES !!!!
      Thus far it is Brazil who has taken off 4 times 3 zeroes out of their currency, not the developed nations.

      Are you stupid, idiot or both ??????

      Why dont you go back to YOUR own medias in 1997 and 1998 !
      You were telling the same thing as how safe and good were your economy and your currency !
      What happened next ??????

      Why dont you go back to YOUR own medias in 1990 and 1991 !
      You weere telling the same thing as how safe and good were your economy and your currency !
      What happened next ??????

      Why dont you go back to YOUR own medias at the end of the 1970’s ?
      You were telling the same thing as how safe and good were your economy and your currency !
      What happened next ?????

      Now just go back to YOUR OWN MEDIAS from 2007 -2008 !
      You were/are telloing the same thing as how safe and good were/are your economy and your currency !!!!!!
      What will happen next ?????

      Every time you first said…..THIS TIME it will be sustainable !!!!!!
      So far, EVERY TIME YOU FAILED….MISERABLY !!!!

      Even during the recent BOOM times YOU WERE UNABLE TO HANDLE YOUR OWN TRADES FINANCING…but had to ask foreign financings because YOUR GOVERNMENT AND BANKS RATES ARE THE WORST ON EARTH…ON AN AFTER INFLATION BASIS !!!!

      EVEN SUB-SAHARAN COUNTRIES HAVE LOWER TRADE FINANCINGS IN THEIR LOCAL CURRENCIES THAN WHAT BRAZIL OFFER TO THEIR OWN BUSINESS PEOPLE !!!!! SAME FOR CONSUMERS FINANCINGS !

      Where else on earth do people have to pay interest rates of 35 % for cars, 55 % for white goods and 165 % for overdrafts while inflation is in the 5-6 % range ?????? OHHHHH…this is of course only for locally produced goods. Otherwise YOU HAVE TO FIRST ADD A VERY HIGH IMPORT TAX TO THE BASE PRICE…and then add the various rates stated above !!!!!

      Yessss dnbaiacu…..CAN YOU SPELL AND WRITE THE NAME OF A COUNTRY EXCEPT BRAZIL…WITH SUCH HIGH RATES WITH A SIMILAR INFLATION ??????

      Waiting impatiently to read how smart your answer will be.

      And if you think paying such rates are good for your banks, sure they are !
      But if you applaude them, then write them and tell them they are so good that by charging more they will be even better !
      Dont worry…they are going to raise their rates…even without you asking !
      May be not in the short term, but in the not too distant future anyway.

      Be happy in Brazil where the name of the game is…BUY ONE…BUT PAY FOR TWO OR THREE !!!!!! OTHERWISE….NO CREDIT !!!!!

      Simple as that !

      If you dont see that the one being taken for a ride in Brazil are the poors and the middle class…such as you dnbaiacu… you
      are even more idiot and stupid I could ever imagine !!!!!

      Stupid question dnbaiacu, in all confidientiality, just between you and me :
      ARE YOU SO MASOCHIST THAT THE HARDER YOUR MASTER WHIP YOU…..THE MORE YOU BEG FOR….STILL HARDER ?????

      As to the boomerang, it is yours, coming back to you…if you cant see it coming !!!!

      Just watch. As I said not necessarily in the next 1-3 months !

      If you dont know what a bubble is, just look at long term commodities charts on whatever commodities you chose !!!!!
      And then see what followed in the price of your economy, AND inflation that followed in YOU country AFTER the bubble, and look as well what YOUR CURRENCY DID…AFTER THE BUBBLE PHASE !!!!!

      If you have no idea of where to find out long term commodities charts, here are 2 sources :
      http://www.mrci.com/pdf/charts.php and prices are updated
      http://www.futuresbuzz.com/long_term_charts.html even longer term charts but updated only until several months ago then you have to update them using the first site to see where we stand in very long term charts patterns

      And both sites are FREE !!!!!

      Simple…isnt ?????

      ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰

    • Joรƒฦ’ร‚ยฃo da Silva

      [quote]Developed nations have not forgotten !!!!!
      Betrayals, cheating and lying always have a high price. [/quote]

      Another great quote from Ch.C. Betrayals,Cheating and Lying do have a [i]very high[/i] price,indeed. It is like Boomerang. Comes back to you.

    • ch.c.

      Furthermore to dnbaiacu……
      “Know who your real freinds and family you can count on are”

      So true….just listen to Lula, Chavez, Kirchner and his Bimbo and what they said against the developed nations…for the last several years !!!!! But also what Chavez, Kirchner and his Bimbo did. Short memory suddenly ??????

      Developed nations have not forgotten !!!!!
      Betrayals, cheating and lying always have a high price.

    • ch.c.

      The loyal tax payer in the end takes the burden for everything ! Yes, they will pay, but not necessarily so monetarily !
      Why dont you look at the rate of the Brazilian Government Bonds in Brl ?
      Why dont you look at the rate of the Brazilian Government Bonds in US$ ?
      Why dont you look at the rate of the Brazilian Corporations Bonds in Brl ?
      Why dont you look at the rate of the Brazilian Corporations Bonds in US$ ?

      Last but not least, a sweat candy just for you dnbaiacu……..why dont you look at the rate YOU pay at YOUR bank, when you borrow for a car (35%) a white goods (55%) and overdrafts (165%) ??????

      Are you telling that YOU will not pay ? Of course you will !
      Therefore not only YOU will pay but as you said despite these SHARKS RATES ON YOUR BORROWINGS…..There IS already an allegiance in place if you did not know YET. If you don’t comply , things will be just that more difficult…FOR YOU….dnbaiacu !!!!

      WoooooooW…….Kinda leaves YOU speechless !

      With Serenity from Switzerland. The country actually with one of the World Lowest Interest Rate and the country with THE WORLD LOWEST INTEREST RATE ON A SECULAR BASIS !!!!
      Ohhhhhh but also the country with the World Lowest Unemployment even these days. 2,4 %
      Ohhhhhh and also a country with one of the LOWEST inflation rate on earth !

      But….but….but…Brazil with the World HIGHEST INFLATION RATE ON EARTH OVER THE LAST 50 YEARS….AVERAGING 400 % PER YEAR…UNTIL 2007 !!!!!!!
      Yeahhhhh….you just had a pause of several years. NOTHING ELSE ! NOTHING NEW ! NO FUNDAMENTAL CHANGE !

      There was a worldwide bubble IN COMMODITIES, CURRENCIES, REAL ESTATE, AND DEBTS !
      YOU GOT THE 4, we had 3 IN EUROPE, and the USA had 2 !
      Now you have/will have 4 BURSTS, Europe 3, and the USA 2 !!!!
      About your foreign currencies reserves ? No problem ! Brazil and most others are going to give them back to their owner one way or the other ! Either by selling your hard currencies to support your monkey currencies….and/or…. through very high rates on the renewal of these debts you have in hard currencies !
      Because if you dont renew your foreign hard currencies debts when at maturity, you will use and deplete your reserves !!!!!

      Simple as that !
      YOU ARE TRAPPED FOR SEVERAL YEARS IN YOUR OWN FILTHY GAME JUST AS YOU DID SO MANY TIMES IN YOUR HISTORY !
      You cant finance your trades with your Brazilians interests rates. Wayyyyyyyyy TOO HIGH !!!!
      And reducing your rates too much will weaken the base : your currency just as in the past ! INFLATION INFLATION AND MORE INFLATION !!!!!
      But dont worry, at times you will have NICE BEAR MARKETS RALLIES EVEN LASTING 1 TO 3 MONTHS !

      ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ ๐Ÿ˜ฎ

    • ch.c.

      but this is a horrible mess. Most stock exchanges across the U.S.
      True Falupa !!!!!
      But why dont you look first of who is losing the MOST ?????
      The emerging nations exchanges or the the U.S. exchanges ?
      And what about the currencies ? What currencies are going up and those going down ?????

      Emerging nations had a double whammy on the upside, and now a double COUNTER whammy….on the downside !

      Surprised ?

      I am surprised by its speed and intensity but not for the trend !

      And about your insane President Robin the Idiot, so proud and so confident on his Us$ 200 billion reserves purse, let me laugh.
      Russia has a similar GDP than Brazil, but until recently US$ 550 billion foreign currencies reserves.
      Or stated otherwise 2,5 times greater than Brazil for a similar size economy.
      Have they avoided the meltdown ?????

      Wellllll…just have a look ! simple !

      So you see that it is not by having 2,5 times LESS than Russia, than Brazil is safer than Russia !!!!!

      Ohhh and about your great club called BRIC !!!! The Indian rupee is at its HISTORICAL RECORD LOW !!!!!!
      The Russian Ruble not too far from its HISTORICAL LOW !!!!!!
      Then guess who will be the next country that will have its currency at its not far away from historical LOW…or at a NEW HISTORICAL LOW….SOONER OR LATER !!!!

      Not the China Currency. China has 50 % of its GDP in foreign currencies, Russia 40 % and Brazil 15 % !!!!!

      Who is the weakest of those 3…IN YOUR VIEW ?
      Ohhh and the other 2 still have a much higher economic growth than Brazil if you did not know !!!!!

      You see Falupa for a poor idiot like Lula Us$ 200 billion is big. But it is really that big when measured against the other members of the “GREAT” BRIC ??????

      But dont worry everyone is in a meltdown for the time being. Some more than others. What you have to try to guess is…who will end up in a bigger mess than the others !
      Simple !
      Isnt it ????

    • ch.c.

      injected HUGE sums of money ……..Brazilian Central Bank pumped US$ 7.7 billion, Mexico US$ 2.5 billion, Argentina US$ 3.5 billion !!!!!
      Another Latin America view of what means…HUGE !!!!!!
      And it is still not enough to stop your currencies from…COLLAPSING !!!!
      Junkies are by the hundreds of millions in Latin America.

      ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰ ๐Ÿ˜€ ๐Ÿ˜‰

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