Brazil Cheers Fed’s Cut and Gets Ready for Bull Times

    Brazil's stock exchange Bovespa

    Brazil's stock exchange Bovespa The surprising US Fed's cut of its federal funds rate by 50 basis points to 4.75% had immediate repercussion at Bovespa, Brazil's stock market. The Ibovespa, Bovespa's main index oscillated around 1% in positive territory until 3:14 pm, Brazilian time, when the Federal Reserve decision was announced. At 3:40 the index had already zoomed to 4.5%.

    In inverse direction the American dollar plummeted 2.29% vis í  vis the real, closing at 1.877 reais for one dollar, the lowest value since the beginning of August.

    The Ibovespa, which tracks the 63 most traded stocks in the Brazilian stock exchange, closed Monday with 56,666 points, a 4.28% boost for the day. It was the best daily hike since March 6 when the Ibovespa gained 5%.

    The volume of transactions reached 5.77 billion reais (US$ 3.03 billion). For the Brazilian stock exchange, yesterday's results were the best since July 23, the day before the start of the American financial crisis that's dragging down markets worldwide.

    Brazil's country-risk rate followed the dollar down falling 6% to 188 points.

    In the good news department, Brazil's government-controlled oil company Petrobras announced  that the country's oil production grew to 1.8 million daily barrels in August, 2.5% above what was produced last year in the same period. The company's preferential shares jumped 4.33% to 56.85 reais.

    Brazilian analysts are cheering the Fed action. The Federal Reserve's decision should bring more dollars to Brazil from international investors looking for a place that will give more bang for their bucks.

    For being riskier than their American counterparts Brazilian shares need to offer a better reward to foreign investors in order to entice them to bring their money to the country.

    Another benefit will be felt by Brazilian companies, which will be able to get better terms for their international loans. Moreover, a prosperous US economy is also good news to exporters since the United States is still Brazil's largest buying market.

    As Luí­s Otávio Leal, economist from the ABC Brasil bank, explains, "For Brazil, it is better when the interest rates fall. With smaller interest rates in the US, foreign investors will look for emerging countries like Brazil in search of better rentability. If the appetite for risk comes back among investors, Brazil will be the first in the list."

    Tags:

    • Show Comments (2)

    • Ric

      The Fed cuts and Brazil goes euphoric, but in a recent article President Lula that Brazil would not be willing to take a hit if the US went in to a subprime-related recession. Glad they have learned how to Pick and Choose.

    • aes

      giddyup. . .

    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

    More Accidents But Less Deaths on Brazil’s Highways at New Year’s

    There were 40.54% fewer deaths and 9.7% fewer injuries on Brazil’s federal highways this ...

    Navteq São Paulo

    Brazil: Digital Navigation in Sí£o Paulo and Rio Much Easier Now

    São Paulo and Rio de Janeiro streets are now covered by Navteq a global ...

    Old Plan, Old River

    California and Israel have been used as inspiration for several irrigation plans in the ...

    Down for the Count

    Ciro Gomes has still not made a sincere apology for his asinine remark that ...

    Brazil Blames US for Doha Negotiations Stalling

    Brazil's chief negotiator at the Doha Round of trade talks at the World Trade ...

    A Warning from Molson Coors to Brazil: Make Money or Else

    In a recent meeting of its board of directors, Canada-based Molson Coors Brewing Company ...

    Musical Chairs Continue at Brazil’s Lula Cabinet

    In the presence of President Luiz Inácio Lula da Silva, Jaques Wagner took office ...

    WWF Expedition Discovers New Fish, Frog and Tree Species in the Amazon

    The Juruena-ApuÀ­ Expedition, organized by the Washington-based  World Wildlife Fund (WWF), reports that it ...

    Brazil: US Firm Acquires Jockey Clubs’ Broadcast Signals

    Carnegie Cooke and Co., Inc. announced the acquisition of the domestic racing broadcast signal ...

    AIDS drug Kaletra from Abbott

    In Showdown with Brazil Over AIDS Drug Patent, Abbott Blinks First

    On June 24, Brazil issued an ultimatum to the Illinois-based pharmaceutical corporation Abbott Laboratories ...