-Caveat Lector-
BBC News Online: Business: The Economy
------------------------------------------------------------------------
Front Page | World | UK | UK Politics | Business | Sci/Tech | Health |
Education | Sport | Entertainment | Talking Point | High Graphics | Feedback |
Help | Noticias | Newyddion |
------------------------------------------------------------------------
Wednesday, February 3, 1999 Published at 16:46 GMT
IMF talks calm Brazil's markets
<Picture>
IMF talks calm Brazil's markets
Brazilian President Fernando Henrique Cardoso has met with senior negotiators
from the International Monetary Fund who are hammering out possible solutions
for the country's deep financial crisis.
After the meeting, he said that "the situation in Brazil is developing the way
we wanted ... with the return of confidence in the markets."
The real, the Brazilian currency, has held steady on foreing exchange markets
following the appointment of a former aide to international financier George
Soros as the country's new central banker on Tuesday.
The IMF's First Deputy Managing Director Stanley Fischer and other fund
officials had a working breakfast with President Cardoso in the official
presidential residence in Brasilia.
Also attending the breakfast were Brazilian Finance Minister Pedro Malan and
the newly-nominated president of the central bank Arminio Fraga Neto.
<Picture: [ image: width=150]>
The President later told reporters that it was "not crucial" that the IMF
speed up a second $9bn instalment of international loans for Brazil because
the country's foreign currency reserves were at a "comfortable" level.
However the government hopes Mr Fischer's presence will accelerate the release
of a second slice of the $41.5bn international loan package assembled by the
IMF.
High interest rates
The two sides must first negotiate new targets for Brazil's budget, interest
rates and foreign exchange rules following its surprise devaluation three
weeks ago.
The IMF has given a clear signal that it expects Brazil to keep its interest
rates high to defend the currency.
"Clearly the tightness in monetary policy will continue," said IMF Deputy
Managing Director Alassane Ouattara. "Our experience in Asia has shown that it
is important to see a firm monetary framework at the beginning of a crisis."
Brazil raised its interest rates to 39% on Monday. But the continuation of
high interest rates could send the Brazilian economy into a deep recession
this year.
More credible banker?
Mr Fraga is a former central bank official who has until recently directed the
speculative activities of Soros Fund Management, the powerful investment
vehicle of the international billionaire George Soros. He replaces former
central bank chief Francisco Lopes, who lasted just three weeks in the job.
He was international affairs director at the central bank between 1991 and
1992 under former President Collor de Mello, before joining the Soros Fund in
1993.
He has now severed all his links with Mr Soros and "there is no relation
between his opinions and those of his former boss," according to Brazil's
Finance Minister Pedro Malan. Mr Soros has been advocating some sort of
international currency coordination recently.
<Picture: [ image: width=150]>
Mr Malan said that the appointment "in no way represents any change in the
direction and orientation of economic policy." He said further changes would
be announced at the central bank shortly.
Mr Fraga's appointment was seen by economists as giving Brazil's economic
policy more credibility in international financial markets.
"He's a very serious man," said Inter-American Development Bank economist
Ricardo Hausmann. "I think if he announces an economic programme...it will
have a lot of credibility, and I think that we're seeing that right now as we
speak in the strengthening of the real."
And a foreign exchange dealer added: "A guy with practice in the market is
going to help a lot more than somebody who just knows theories."
Mr Fraga will only take over when he is confirmed by the Brazilian Senate in
hearings which will begin on 22 February following the Carnival holiday.
Until then, the central bank's International Affairs Director Demosthenes
Madureira de Pinho Neto would serve as interim head.
Meanwhile the Finance Minister revealed that he had submitted his own
resignation, but it had been refused.
"I will remain in the position as long as I have the benefit of the
president's confidence," Mr Malan said.
Real on the rebound
The real meanwhile was trading at 1.77 - 1.79 to the dollar on Wednesday. It
had gone as low as more than 2.0 reals to the dollar on Friday, a devaluation
of more than 40%.
The Sao Paulo stock exchange, the largest in South America, was up 1.4% in
early trades on Wednesday. It closed down 1.79% on Tuesday.
The embattled currency has recovered since panic eased about weekend rumours
that the government was planning extreme measures such as freezing bank
accounts.
Mounting tension over the weekend failed to materialise into the feared run on
savings accounts on Monday, providing some relief for the country's bankers.
Traders said a main reason for the real's recovery was the central bank's
decision to increase the amount of dollars banks can sell on the domestic
market.
------------------------------------------------------------------------
<Picture>Business Contents
<Picture><Picture> - London Shares<Picture> - The Markets<Picture> - The
Economy<Picture> - The Company File<Picture> - Your Money<Picture> - Foreign
Exchange<Picture>The Economy Contents
<Picture><Picture><Picture>
- <Picture>
Economy Reports
<Picture><Picture>
- <Picture>
Interest Rates
------------------------------------------------------------------------
Business Contents
�London Shares �The Markets �The Economy �The Company File �Your Money
�Foreign Exchange
The Economy Contents
�Economy Reports �Interest Rates
Relevant Stories
Crisis talks on Brazil economy (17 Jan 99 | The Economy)
Brazil goes for broke (15 Jan 99 | The Economy)
Brazil's shares plunge (13 Jan 99 | The Economy)
Brazil crisis deepens (12 Jan 99 | The Economy)
Brazil quarrels over debt repayments (08 Jan 99 | The Economy)
Brazil default sparks sell-off (08 Jan 99 | The Economy)
Internet Links
President Cardoso Home Page
International Monetary Fund
Brazilian government
The BBC is not responsible for the content of external internet sites.
In this section
US leaves rates unchanged
IMF talks calm Brazil's markets
UK interest rates: cut or hold?
Retailers' hopes in UK dashed
UK nearly euro-ready, but...
Markets rebound as interest rates kept on hold
Glimmer of hope in service sector
Byers under fire over 'wealth creation'
Worst is over, says George
Euro on top
�112m boost for long-term jobless (From UK Politics)
CBI calls for stability Budget
New Year rally in house prices
Jobs threat as engineer collapses
Farmers face credibility gap
Schr�der attacks speculators
Free ISP offers talking email (From Sci/Tech)
US budget surplus beckons
Challenge to free Web access
Manufacturing doldrums
Job losses nationwide
------------------------------------------------------------------------
Front Page | World | UK | UK Politics | Business | Sci/Tech | Health |
Education | Sport | Entertainment | Talking Point | High Graphics | Feedback |
Help | Noticias | Newyddion |
------------------------------------------------------------------------
------------------------------------------------------------------------
Back to top | BBC News Home | BBC Homepage | �
DECLARATION & DISCLAIMER
==========
CTRL is a discussion and informational exchange list. Proselyzting propagandic
screeds are not allowed. Substance�not soapboxing! These are sordid matters
and 'conspiracy theory', with its many half-truths, misdirections and outright
frauds is used politically by different groups with major and minor effects
spread throughout the spectrum of time and thought. That being said, CTRL
gives no endorsement to the validity of posts, and always suggests to readers;
be wary of what you read. CTRL gives no credeence to Holocaust denial and
nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://home.ease.lsoft.com/archives/CTRL.html
http:[EMAIL PROTECTED]/
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
SIGNOFF CTRL [to:] [EMAIL PROTECTED]
Om
