Posted on 1/22/2008, 2:15:12 PM by Brilliant
Brazil's stock market and currency rallied on Tuesday after a surprise U.S. Federal Reserve interest rate cut raised investor appetite for emerging market securities that had tumbled the previous session.
The Bovespa index .BVSP of the Sao Paulo Stock Exchange rose 2.14 percent to 54,859.71 points, after slumping 6.6 percent on Monday and closing at its weakest since Sept. 12.
Brazil's currency, the real gained about 1 percent against the U.S. dollar to 1.806, after a 2.5 percent tumble on Monday.
The Fed slashed benchmark U.S. interest rates by a hefty three-quarters of a percentage point in a surprise move to try to avert a recession. The cut took the key federal funds rate, which governs overnight lending between banks, down to 3.5 percent, its lowest since September 2005.
Interest-rate futures were mostly lower on the BM&F commodities and futures exchange in Sao Paulo, reflecting improved investor sentiment after the Fed cut.
On the stock market, state-controlled oil company Petrobras, Brazil's most actively traded stock, gained 3.57 percent to 68.85 reais. The company said late Monday it struck a big deposit of gas and condensate in the offshore Santos basin that could be as large as last year's giant Tupi oil find.
Vale, the iron ore miner formerly known as CVRD, rose 3.44 percent to 43.08 reais, recovering from an 11.3 percent tumble on Monday when it confirmed talks to buy rival Xstrata. The company said on Tuesday its management had approved a proposal to pay out $2.5 billion in dividends this year, a 33 percent increase over the amount it paid in 2007.
I thought this wouldn’t work and we’re doomed.
When I was in Brazil in 2005, the exchange rate was 2.2 Reais per Dollar. Now it’s down to 1.8 Reais per Dollar.
How’s that supposed to be an improvement for the US?
By the way, Brazil has VERY protectionist trade policy, weighted most heavily against US and Japanese made goods.
When I was there, Gasoline was R$2.49 per liter (about US$4.50 per gallon). It’s still about the same in R$, but now that translates to about US$5.40 per gallon.
We are considering retirement in Brazil, since we speak Portuguese, but this just blew a hole in how far my retirement funds will go down there.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.