Brazil’s Finance Minister Vows to Keep Austerity Policy

    Latin American stocks gained ground, in line with the U.S. market, after minutes from the latest FOMC meeting suggested that the U.S. Federal Reserve’s monetary tightening cycle may be nearing an end. Brazilian shares were further boosted by growing hopes that the country’s finance minister will remain in office.

    Brazil’s Bovespa Index surged 378.94 points, or 1.22%. Mexico’s benchmark Bolsa Index rose 99.77 points, or 0.60%, while Argentina’s Merval Index jumped 18.77 points, or 1.17%.

    Brazilian stocks rallied as investors were cheered by indications that Finance Minister Antonio Palocci will remain in his post. In testimony today before a congressional committee, Palocci continued to defend his austere fiscal and monetary policies.

    Palocci has been harshly criticized by businessmen and fellow Cabinet members for keeping Brazil’s interest rate at 19%, which some fear could crimp economic growth. The Minister said he is "unconcerned" about the criticism because President Inácio Lula da Silva backs his policies.

    Today’s congressional hearing did not directly address allegations of Palocci’s involvement in an ongoing political scandal. However, congressmen were scheduled to vote later today on a subpoena ordering Palocci to testify before a congressional inquiry into political corruption.

    In related developments, a local newspaper reported earlier today that Palocci offered his resignation to President Luiz Inácio Lula da Silva last Thursday, and Lula refused to accept the resignation.

    However, Presidential Secretary for Institutional Relations Jacques Wagner denied the report. "It’s not true that Palocci submitted his resignation. This possibility doesn’t exist. Palocci has a role that is irreplaceable."

    Meanwhile, a poll released today showed that support for President Lula and his Workers’ Party administration hit its lowest level ever in November, fueling uncertainty about Lula’s re-election prospects.

    Elsewhere, Mexican shares climbed, hitting a fifth straight record high close. Shares were supported by strength in the U.S. market amid improved hopes the U.S. Federal Reserve is nearing the end of its interest-rate hiking campaign.

    Minutes released today from the Federal Reserves’ last monetary policy meeting revealed that some FOMC members are concerned about excessive rate tightening.

    Resisting the market’s up trend, shares of Cintra dropped after the government received only two bids for majority stakes in each of the company’s main airlines, AeroMexico and Mexicana. The level of interest in the carriers has fallen sharply in recent months. Initially, 10 groups had expressed interest in the airlines.

    In local economic news, Mexico posted a current account deficit of US$ 650 million in the third quarter, down from US$ 893 million a year earlier.

    Argentine issues jumped amid expectations that Argentina will soon begin talks with the International Monetary Fund about a new accord. Finance Minister Lavagna indicated yesterday that IMF talks should start within 20 days.

    Among the movers, shares of Tenaris rose after the company confirmed that its Siat SA subsidiary has presented a binding offer for US$ 28 million of tube assets belonging to local steelmaker Acindar. Acinder also gained on news of the deal, which was first announced yesterday.

    Thomson Financial Corporate Group – www.thomsonfinancial.com

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Leonardo Prudente hides bribe money

    Crooked Brazilian Assemblyman Forced to Step Down by Court

    Brazilian judge Álvaro Ciarlini from a Federal District Public Finance court in Brazilian capital ...

    Great Expectations for Chinese President Visit to Brazil

    Closer ties between Brazil and China will be one of the results of the ...

    Beth Carvalho reigning supreme

    She sings the joys of Carnaval, love’s pains, the poor’s everyday life, the Indians’ ...

    Brazil Revamps Family Farming Program

    The Incentive Program for Cooperativism in Family Farming and Solidary Economy (Coopersol) was launched ...

    Downtown São Paulo, Brazil

    Brazil Goes Digging for Money in Saudi Arabia

    The Saudis are discovering Brazil as an investment destination. The statement was made recently ...

    Brazil’s Wild West Has Largest Concentration of Slave Workers

    The Brazilian states with the highest incidence of slave labor are Pará, Mato Grosso, ...

    Brazil and IMF: Eyeballing Each Other

    The Brazilian government and the IMF have not yet discussed the possibility of a ...

    Brazilian wheat

    Brazil Never Had Such a Plentiful Crop: 144 Million Tons in Grains

    It has been confirmed. The 2007/08 was the greatest grain and oilseed crop ever ...

    Mixed Race, Mixed Up Feelings

    The debate over affirmative action is encouraging. If nothing else, it forces people in ...

    Brazil’s Lula: Displeasing Greeks and Trojans

    Lula is clearly trying to pull off a delicate balancing act. He is adhering ...