Brazil Real Heads for Biggest Fall Since Jan.: Latin Currencies
Sao Paulo, May 15 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's real was headed for its biggest plunge in almost four months on concern its 19 percent gain in 2003 may prompt the government to bolster the U.S. currency to safeguard the growth of Brazilian exports.
The real fell 2.7 percent to 2.9675 per dollar at 3:45 p.m. New York time. The real remains the best performing currency in 2003 among the 59 tracked by Bloomberg even after its three-day, 3.6 percent decline. Mexico's peso fell to a two-week low.
There is this concern exporters and the government may push to prevent the real from strengthening further,'' said Sergio Machado, head of the Treasury desk at Banco Fator SA in Sao Paulo. Banks are trading on this speculation.''
President Luiz Inacio Lula da Silva's government is divided over the stronger real's possible effect on export growth, which may account for half of the Brazilian economy's projected 2.5 percent growth in 2003. While exporters have suggested the government take steps to weaken the real, a slowdown in inflation has prompted calls for the central bank to lower lending rates from a four-year high to boost domestic demand and growth.
Over the last week, the currency has traded in a range of 2.8425 to 2.9490 to the dollar as exporters buy reais as the real strengthens and importers buy dollars as it weakens.
``The great discussion over recent days has been the right level for the dollar that will preserve the trade balance and allow inflation to come down,'' said Clive Botelho, treasury director at Banco Santos SA.
Botelho and other investors say a rate cut would pare local banks' returns on Brazilian government securities engineered by raising money at low rates abroad to buy Brazilian Treasury debt.
Rates
Rates were raised five times since October from 18 percent to 26.5 percent as last year's 35 percent decline in the real sent inflation soaring to 12.53 percent, the highest 12-month rate since September 1996.
Botelho said many investors expect interest rates to come down in the second half, loosening up cash to buy dollars.
``We expect to see some significant decompression of monetary policy in the second half -- everyone's aware of that.''
Brazil's benchmark 8 percent bond that matures in 2014 fell for a second day, losing 1.75 cents on the dollar to 87.38, raising its yield to 11.17 percent, according to J.P. Morgan Chase & Co. The bond rose to a record high 91.75 on May 13.
Brazil's 11 percent bond that matures in 2012 led declines among the country's foreign currency bonds, losing 4.45 cents on the dollar, its biggest decline since Dec. 5, to trade at 98. At that price the bond yields 11.46 percent.
Mexico
Mexico's peso extended its two-day, 3.1 percent decline as lower interest rates and weakness in the U.S. economy prompted investors to sell pesos. The currency extended declines after the government said the economy contracted in the first quarter.
The peso fell 1.6 percent to 10.4370 per dollar. Earlier, the peso fell 1 percent as the day's trading opened, then reversed declines to rise 0.4 percent, before the afternoon's decline. The peso rose as high as 10.1075 yesterday.
The currency's two-day slide follows the decline of Mexican Treasury bill yields to record lows and the worst retail sales figures since 1991 in the U.S. The narrowing of the difference between U.S. and Mexican debt yields combined with the prospects of slower growth in Mexico's biggest export market have investors reluctant to hold pesos now, said Adam Weiner, Latin American strategist with AIG Trading Group in Greenwich, Connecticut.
People are concerned interest rates are at an all time low,'' said Weiner. At a certain point, people say the carry isn't as good as it was.''
Mexican Treasury-bill yields on May 13 fell to a record low at a government debt auction, which may signal that demand for peso-denominated securities will start to slow as interest rates fall below the inflation rate, analysts said.
Historic Lows
The 28-day Treasury bill's yield fell to 4.90 percent, its lowest ever, down from 9.7 percent in March while the 91-day bill' yield dropped to 5.59 percent from 6.19 percent a week ago.
Even with yields on U.S. Treasuries at four-decade lows -- the 10-year's yield fell to 3.52 percent yesterday -- Mexican securities no longer offer the large returns of earlier this year that helped the peso rebound from a record low in March.
The Mexican government's report this afternoon that the county's economy shrank 0.49 percent in the first quarter saw the peso extend declines.
Mexico has more to lose from slower growth in the world's largest economy than most other Latin American economies.
The U.S. buys about 85 percent of Mexico's $160 billion in annual exports, representing about a fifth of its $600 billion gross domestic product, and provides about 70 percent of the country's foreign investment.
Pace of Decline
Investors with a short-term interest in Mexico are pulling back some of their large peso positions now, explaining the speed of the drop, said Nathaniel Karp, an analyst at Grupo Financiero BBVA Bancomer SA in Mexico City.
There are no other investors with money to move the market like this,'' said Karp. They were coming in pretty hard, pretty strong before, and they were going to leave sooner or later.''
The peso-future contract for June delivery traded on the Chicago Mercantile Exchange fell to a low for May, losing 1.8 percent to trade at 9.5525 cents from 9.73 cents yesterday.
Mexican foreign-currency bonds fell for a second day. The 7 1/2 percent bond that matures in 2012 fell 0.5 cent on the dollar to 113.5 to yield 5.51 percent. The 8 1/8 percent bond due in 2019 fell 0.95 cent on the dollar to 115.20 to yield 6.60 percent and the 11 1/2 percent bond due in 2026 fell 1.1 cent on the dollar to 151, to yield 7.00 percent.
Colombia, Chile
Colombia's peso rose for the fifth day in six on investor expectations the country's central bank will keep its benchmark lending rate unchanged at its weekly meeting tomorrow.
The peso rose 1.2 percent to 2,809.29 per dollar after its 1.1 percent slide yesterday to a 2842.00 close. The peso has gained 2.1 percent against the dollar in 2003 after declining 21 percent last year.
The bank has raised its so-called repurchase agreement rate twice this year to 7.25 percent to slow accelerating inflation and a third increase might threaten growth.
Investors bought dollars yesterday after President Alvaro Uribe said he was concerned about the peso's 6.2 percent gain since January.
Many exporters fret the peso's rise may make Colombian exports less competitive abroad and derail a domestic economic expansion the government forecasts to reach 2 percent in 2003.
Cone
Chile's peso fell for the fourth day in five, losing 0.5 percent to 706.05 per dollar from 702.85 per dollar yesterday, paring its gain on the year to 2 percent.
Argentina's peso fell in both the spot and retail market, losing 1.9 percent to 2.8375 per dollar and 1.6 percent to 2.8450 per dollar respectively.
Peru's new sol was little changed at 3.4750 per dollar from 3.4749 per dollar yesterday. Venezuela fixed its bolivar at 1,598 per dollar earlier this year.
Last Updated: May 15, 2003 15:47 EDT
Andean Devel Corp says places $500 mln bonds in US
Reuters, 05.15.03, 3:09 PM ET
CARACAS, Venezuela, May 15 (Reuters) - The Andean Development Corporation (CAF), the financing arm of the Andean community of nations, said on Thursday it had placed $500 million in 10-year bonds in the U.S. market.
CAF President Enrique Garcia said in a statement the notes were placed Wednesday with a coupon of 5.20 percent in an operation conducted through Merrill Lynch, Citigroup, Credit Suisse First Boston, Deutsche Bank and Goldman Sachs.
The largest multilateral lender to the Andean nations, CAF estimates it will provide about $3 billion in loans to the region in 2003. Last year, the agency approved about $3.3 billion in loans.
Copyright 2003, Reuters News Service
Venezuelan Foreign Minister Chaderton Matos: the USA wouldn't tolerate Venezuelan media antics
<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, May 15, 2003 By: Patrick J. O'Donoghue
In a rapid fire response, Venezuelan Foreign Minister Roy Chaderton Matos challenges US Ambassador to Venezuela, Charles Shapiro's statement on the state of press freedom in Venezuela.
Speaking during a stopover in London on his way to Moscow, the diplomat accuses Venezuelan private print & broadcast media of having taken part in the toppling of a legitimate government and says he hopes the United States of America (USA) would take that fact into consideration.
"Venezuelan media hid information from national and international public opinion and have been manipulating information for years, as well as usurping the place in democracy reserved for political parties." Chaderton Matos insists that calls to topple a democratic government and to political assassination with impunity would never be allowed in the USA.
The USA, the Foreign Minister states, is against incitation to hatred and unfounded arguments against official authorities and persons involved in the process of social change. "Nobody has the right to abolish freedom of expression ... neither governments, private media sources nor international powers."
Squatters' lawyer in Paraguay asks Venezuela for political asylum
<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, May 15, 2003 By: Patrick J. O'Donoghue
The lawyer of a group of homeless people in Paraguay has asked the Venezuelan Embassy in Paraguay for political asylum. Argentinean Marilina Marichal (37) represents some 6,000 squatters in San Lorenzo, 20 kilometers outside the capital Asuncion.
The Paraguayan Attorney General's Office has charged her withdisturbing public order, incitation to violence, defending illegal actions and conspiring against the State. Marichal's husband, Raul Marin says the family has received serious death threats, leaving them with little choice but to seek asylum.
"When the Venezuelan government takes note, I'm sure it will understand our situation."
Marin himself and three squatter leaders face arrest and have been waiting for a ruling from the Supreme Court of Justice (CSJ) on their status as human rights defenders. Marichal is currently inside the Venezuelan Embassy in Asuncion with her 8-year old daughter.
Paraguayan Attorney General Carlos Calcena argues that Marichal's situation does not merit political asylum ... "she has broken the country's laws."
What a Heck?
<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, May 15, 2003 By: Oscar Heck
Attempt by a self-confessed Chavez-hater to discredit Chavez and the government
VHeadline commentarist Oscar Heck writes: Gustavo Coronel's <a href=www.vheadline.com>“An open letter about PDVSA to President Hugo Chavez Frias” is another attempt by a self-confessed Chavez-hater to discredit Chavez and the present Venezuelan government. It is also another desperate and futile attempt to vindicate the anti-Chavez and pro-opposition people from their without-conscience, illegal, unethical, immoral and criminal actions … actions which they have obviously (and publicly) shoved down the throats of all Venezuelans … and by “all Venezuelans” I mean all Venezuelans.
Coronel states that “Chavez” fired 18,000 PDVSA employees in an undignified fashion.
What crock!
I was in Venezuela while most of this happened:
First, Chavez himself was not the one who fired the employees ... he read a list on TV of the employees that were being fired!
Second, if they were to be fired (as they were) how else would these employees know that they were to be fired if they were not showing up to work as they should have been?
By mail? No, the mail service was shut down by Coronel's so-beloved pro-opposition people.
By phone? Probably not, most of the ex-PDVSA saboteurs were probably partying in Aruba or Miami!
Third, they deserved to be fired.
Fourth, they deserved to be “undignified”, as Coronel calls it...
Why? Because they assisted first-hand in destroying the Venezuelan economy … which cost several billions of dollars (not to emphasize the long-term effects of their malicious and pre-meditated actions that caused untold prolonged damage onto the vast majority of “humble” Venezuelans -ú as Coronel's so-beloved pro-opposition people often likes to call “them.”)
Coronel goes on to say that these ex (and I stress ex)-PDVSA employees will go back to work for PDVSA. No way Gustavo. Would you re-hire an employee of your hotel/resort on Margarita if that person sabotaged your installations, stole your keys and went to the media to discredit you? I don’t think so.
What will happen “as sure as the sun goes up every morning”, is that these PDVSA saboteurs and criminals will never work at PDVSA again.
Hopefully, they will never work at any other petroleum company again … they deserve to be “selling cakes in the streets”, as you so derogatorily state! (What is wrong with selling cakes on the streets, Gustavo?)
Now, I have worked for over 20 years as a professional recruiter: corporate executives, upper and mid-level managers, scientists and technical people. I have interviewed and evaluated over 12,000 people in a vast number of fields of activity in several countries. I have helped to mount some of what are today the biggest manufacturing firms in the world in their field. I have also done extensive fraud/criminal/corruption investigation work at high levels.
Coronel considers the PDVSA saboteurs as “real PDVSA professional managers and technicians.” That is also a bunch of crock. True professionals would not have sabotaged PDVSA, especially knowing that the results could be so devastating!
Coronel says that “these values had been accepted by the nation as the guiding principles for the Institution.” This cannot be true ... by implication, most Venezuelans are not saboteurs. Most pro-opposition people are.
Anyone who supports the kind of “values” that the opposition-supporters and the ex-PDVSA saboteurs support, has no “human” values. They have been heartless and without-conscience, thinking only of themselves … as Coronel mentions “…putting everything on the line: jobs, financial stability, family and career.”
Furthermore Gustavo, it is not because someone has “knowledge and experience” in the petroleum industry that it makes them “valuable” for PDVSA. Knowledge and experience are “acquired,” they are not “innate.” There are other factors that play more important roles in the selection of “valuable” employees: human values and inborn character traits, capacities and talents. The fact that a person has a university degree does not make someone more “intelligent” or more “able” or more “persistent” or more “creative” or more “reliable” or more “honest” or more “human” than someone who doesn’t have a degree.
It applies as well to someone who has “experience and knowledge.” Some of the best “crooks” in the world are also some of the most “intelligent” and “creative” people in the world. What one does with his/her talents, traits and capacities depends on the “human values” to which one subscribes.
Example: Who do you think collects priceless “illegal” antiquities and artwork?
Coronel is dreaming (or having some serious nightmares). He is accusing Chavez (and by implication, the present Venezuelan government) of trying to destroy PDVSA.
Where has he been for the last year or so?
Who “stopped” PDVSA?
Chavez? The present government?
No, PDVSA was stopped by those 18,000+ ex-PDVSA employees that so willingly supported the mafia-incited-stoppage … whether duped into it or not!
Coronel addresses Chavez suggesting that he should reflect on his own ethical posture. Maybe Coronel should ask the PDVSA saboteurs and anti-Chavez supporters that participated in the destruction of the Venezuelan economy!
Does he really believe that it is ethical to create a “stoppage”, block streets, sabotage PDVSA, try to close banks and schools?
Does he think that it is ethical to call for the murder of someone in public?
Does he think that it is ethical for employers to intentionally shut down operations (threats included), leaving thousands of average Venezuelans jobless and wageless (!) … simply because the employers are part of the Fedecamaras/CTV/Media/USA backed “stoppage?
(Three of my brothers-in-law lost their jobs -ú due to being locked out in December 2002 -- and still haven’t been paid!)
Coronel says that the ex-PDVSA people were trained in “meritocracy, apoliticism and professional management.”
First, according to the dictionary, “meritocracy” is: a system in which such an elite (an intellectual elite, based on academic achievement) achieves special status, as in positions of leadership. If you believe that “intellectual academic achievement” is “good” criteria for managing/operating a company, then you are simply confirming that the ex-PDVSA employees should not be re-hired. Company leaders selected based on their “intellectual academic achievement” do not guarantee good or great management. “Intellectual elites” are better suited for university and institutions of the like.
Second, if meritocracy is the ex-PDVSA system, then it is very difficult to imagine that “professional management” was one of the backbones of the ex-PDVSA.
Third, you say “apoliticism”. The evidence is abundantly to the contrary! This “meritocracia” brought down PDVSA for political reasons (and probably also to detract from the excesses in personal privileges). It appears to me that Coronel, as well as many pro-opposition supporters really believe that “meritocracy” is a valid contender in today’s world.
Sorry to tell you Gustavo Coronel ... times are changing ... the “intellectual academic elites” are losing ground in Venezuela and worldwide … and for obvious reasons.
Oscar Heck oscar@vheadline.com