May 30 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's real fell for the first day in three as companies took advantage of a two-day, 3.2 percent surge in the real to pay for imports.
Brazil's real tumbled 1.1 percent to 2.9675 per dollar, the currency's first decline in three days, at 3:42 p.m. New York time. The real has gained 19 percent this year, the best performance of the world's 16 most traded currencies.
The market seems to be entering a period of equilibrium where the real is holding around 3 to the dollar,'' said Flavio Datz, a trader with Agora CTVM a securities brokerage in Rio de Janeiro. When the real gains, importers buy, when it falls exporters sell.''
The sale of more than $5 billion of foreign debt by Brazilian banks and companies this year has helped the real rise as the inflow of capital has increased demand for reais. This week, though, Brazil said it would no longer promise to refinance all securities used to insure against declines in the real, raising investors' expectations they may have to buy dollars to hedge against a weaker real.
Such factors are likely to keep the real in the 2.85 to 3.10 range, said Tony Volpon, a Sao Paulo economist with New York-based Dinosaur Securities.
Future Battle
The real may also be falling as large investors, including the Treasury desks of Brazil's major banks, try to push the value of dollar futures contracts to pre-set strike prices that offer them the largest profit when they expire Monday.
Today is the last day of trading for 113,961 dollar futures contracts on Sao Paulo's BM&F futures and commodities exchange. At settlement, the contracts will yield the equivalent of the exchange rate variation on $5.7 billion.
Each contract has an investor betting the dollar will rise and another betting it will fall. The contracts are settled using the central bank's Ptax exchange rate, a rate calculated using average exchange rates culled from the spot market.
It's hard to tell how much the a Ptax-battle is influencing the day's rate, but it is often a factor in the rate at the end of the month'' Datz said. There's a lot at stake, and if you can influence the settlement price, you'll try.''
The U.S. dollar contract for July settlement, the most traded on Sao Paulo's BM&F commodities and futures exchange, rose 1.0 percent to 3.023 reais to the dollar. The June contract rose 0.7 percent to 2.964.
Brazil's 8 percent bond maturing in 2014 fell for a second day, losing 0.38 cent to 89.06 cents on the dollar, raising the yield to 10.72 percent, according to J.P. Morgan Chase & Co.
Regional Currencies
Mexico's currency was little changed after two days of gains, exchanging hands at 10.3070 pesos per dollar from 10.3095 per dollar yesterday, leaving it with a 0.6 percent gain against the dollar in 2003.
The peso fell to a record low of 11.2644 on March 6 on concern the war in Iraq would send oil prices up from 12-year highs, slowing worldwide growth and investment, especially in the U.S., which buys 85 percent of Mexico's exports, representing more than a quarter of its $600 billion economy.
Daily sales of $32 million by the Banco de Mexico announced March 20 and begun on May 2 have strengthened the peso and seen rates on 28-day Treasury notes fall to 4.91 percent this week from 9.83 on March 11.
Argentina's peso rose for the first day in three, gaining 0.6 percent to 2.8650 per dollar from 2.8825 yesterday, boosting its gains against the dollar to 17 percent, the second-best performance among 59 currencies tracked by Bloomberg.
Chile's peso was little changed, exchanging hands at 711.35 per dollar from 711.85 yesterday and has gained 1.5 percent in 2003. Colombia's peso strengthened for the second day in three, rising 0.4 percent to 2,849.25 per dollar, while Peru's new sol was unchanged at 3.4945 per dollar. Venezuela earlier this year fixed its bolivar at 1,598 per dollar.
<a href=www.vheadline.com>Venezuela's Electronic News
Posted: Friday, May 30, 2003
By: Patrick J. O'Donoghue
In a biting article entitled "Catia and the Civil War," veteran historian and political analyst, Domingo Alberto Rangel says what happened on Catia's Peru Street last Saturday is a straight answer to people begging the question: can there be a peaceful solution to Venezuela's problems.
"The two groups that skirmished in Peru Street made war preparations ... the government group focused on Peru street as if it were long-range artillery placing lookouts and observers on nearby 23 de Enero, while the opposing band let loose its goons on the same street or houses in the neighborhood."
Rangel points out that the police forces went to the rally to protect and/or point arms depending on the groups. The National Guard (GN), Mayor Bernal's Libertador Police (Policaracas), Tupamaros and Carapaica acted as one block, while the Metropolitan Police (PM) and Bandera Roja formed the other ... "the PM is the opposition's SS, whereas Policaracas is the government's SA ... every meeting or march is a battle or skirmish that affects Venezuela."
As for the arguments that there is peace in Venezuela, Rangel does not bat an eyelid affirming that the Venezuelan Civil War is peculiar, in as far as the two sides still maintain cordial relations ... "after all, they belong to the same system."
Accion Democratica (AD), Primero Justicia (PJ) and Proyecto Venezuela (PV) enjoy legal status and work on National Assembly (AN) committees alongside government deputies.
Movimiento Quinta Republic (MVR) deputy and journalist, Juan Barreto has become rich with an apartment in Miami said to be worth $297,000 where he meets AD leader, Henry Ramos Allup, who is rich from way back ... "they know how to be cordial ... in the streets it's different .... there they have to insult each other, while the crowds that follow them have to bite the dust ... the war has been programmed and battles sought ... the only ones who fall are the indians not the chiefs."
Highlighting his dislike of both sides, the irreverent old-timer comments that it was some show that Venezuelan Executive Vice President Jose Vicente Rangel and AD general secretary, Henry Ramos Allup put on, " awash in crocodile tears when both had sent their armed groups to battle in Catia."
"As the war continues, so does the farce with declarations of peace and concordance, which the Timoteos, Jose Vicentes, Aristobulos and Americos must sign every now and again to play to the gallery and satisfy the imperialist overlord ... 24 hours before the Catia skirmish, the government and opposition made a solemn declaration of peace ... fortunately, nobody in Venezuela is confounded ... the country knows that they are clowns of hypocrisy with a duty to lie ... agreements are made to be broken ... the declarations serve their purpose of washing one's hands like Pilate."
The Spirit of Catia will live on and shape the future!
<a href=www.vheadline.com>Venezuela's Electronic News
Posted: Friday, May 30, 2003
By: David Coleman
Venezuela's politically opposition-loaded 24/7 TV news channel, GLOBOVISION has gone ballistic after bailiffs turned up at the studios demanding payment of taxes running into millions of bolivares. Accompanied by a court official, telecommunications regulatory authority CONATEL lawyers were immediately subjected to abuse by broadcast legal staffers who claimed they'd been given 25 days grace from May 16 to present an appeal to the Infrastructure (MINFRA) Ministry. Globovision lawyer Moises Vallenilla claims government authorities are "attempting to intimidate news channel employees" by raising the taxation demand in the first place.
Insiders say that Globovision is attempting to thwart tax collectors after joining a widely-broadcast call to refuse to pay taxes as a direct result of the political opposition's failure to overthrow the Chavez Frias government in a 2-month work stoppage that attempted to cripple the nation's economy. Valenilla, however, says that Globovision does not owe as much as one cent until all the lengthy legal processes have been completed ... and it's his declared intent to string things out as long as the legal system can be manipulated in Globovision's favor.
CONATEL executives, however, respond saying that they are obliged in law to supervise and ensure that all legal requirements are met by the TV broadcaster and that they would be failing in their duty to the nation if they did not pursue payment of taxes as required in law.
Valenilla, for his part, says "the unusual about this situation is that they are practically saying to us, either you accept this notification signed by Conatel chief Jesse Chacon or we will proceed using other means without explaining what they mean by the threat!"
"What we do not understand is how CONATEL is seeking to be paid, urging Globovision to pay quantities of money which are not yet defined and which are still under discussion ... this is simply a new attitude of aggression on the part of Conatel."
Globovision director general Alberto Federico Ravell says it is "exceedingly strange" that Conatel "should descend out of the blue on us just the same day as the government and the opposition is signing a peace agreement." He adds that he views the tax-gathering procedure as being "a completely illegitimate and illegal attack on the TV station ... if this is the beginning of a peace accord, we are on the wrong road."
CONATEL's Jesse Chacon insists that Globovision must pay proper taxes in accordance with the Organic Tax Code as established in the 1999 Constitution. Globovision counters that the law appears to allow them a period of grace until June 20, although they have already stated publicly that they'll take it all the way to the Supreme Tribunal of Justice (TSJ) is they have to...
"What we have here is that Globovision is attempting to refuse the service of proper court documents related to the tax debt and have blocked the bailiffs and court officials from entering the building ... it is a completely normal legal procedure that's applied to any person or business that is considered to be indebted to the IRS/Seniat ... there can be no exceptions."
"The law stipulates that Globovision must pay what is due to the taxman and then, if they feel unjustly treated, they can launch any appeals procedure direct to the IRS/Seniat or, failing agreement, they may resort to the courts to settle the matter ... "the point is that they must pay the taxes and any fines imposed for their failure to pay on time! It's a simple matter that they pay up or we will be forced to take them to court just like any other tax evader."
"Conatel lawyers have ratified the institution's position and notified Globovision, indicating the legal mechanism they must follow if they are not in agreement ... but they must pay their taxes, it's as simple as that!"