BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Monday, 29 July, 2002, 23:05 GMT 00:05 UK
Brazilian currency continues to fall
Traders work in the dollar pit at the BM&F futures and commodities market in Sao Paulo, Brazil on Monday July 29, 2002.
Panic selling drove the real to fresh lows
The Brazilian currency has continued its slide as panic took control of the currency trading pit.

The real fell 5.3% to 3.18 against the US dollar, taking its falls so far this year to 28%.

The drop was sparked by fears over the upcoming meetings with the International Monetary Fund (IMF) in Washington.

Brazil has warned that it may have to ask for fresh assistance from the Fund if the financial turmoil in the country persists.

Sceptical dealers

"The IMF welcomes the decision of the Brazilian authorities to send a [negotiating] team to Washington, and we look forward to productive discussions," the Fund said.

But traders were pessimistic about the likely outcome of the talks between the indebted country and the Fund.

US Treasury Secretary Paul O'Neill further undermined sentiment by commenting that aid to Latin American countries has a tendency to end up in Swiss bank accounts.

President Cardoso has called for a retraction of disparaging comments from Mr O'Neill, who is due to visit the country next week.

Debt worries

The real's weakness has triggered fresh concerns over Brazil's $250bn debt burden.

A decline in the value of the real increases the cost of servicing its dollar-denominated debts.

A weaker real also makes imported goods more expensive and fuels inflationary pressures.

Left-wing candidate Luiz Inacio Lula da Silva is gaining in popularity ahead of general elections in October.

Financial markets are worried that Lula may adopt populist policies which would pile further pressure on Brazil's shaky finances.

Neighbouring Argentina's economic crisis has also had a knock-on effect on Brazil's economy.

See also:

17 Jul 02 | Business
07 Jun 02 | Americas
06 Jun 02 | Business
28 Dec 01 | Business
12 Jun 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes