June 5 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's currency rose to its highest close in almost 11 months after the central bank sold contracts used to protect investors from a decline in the currency, reducing demand for dollars.

The real rose 2.0 percent to 2.8575 per dollar in Sao Paulo, its highest closing price since July 18. The real has gained 24 percent in 2003, the best performance of the 17 most-traded currencies. Mexico's peso rose.

Investors, primarily bank Treasury desks, have more bets the real will fall than it will rise, said Helio Ozaki, a trader with Finambras Corretora de Cambio e Titulos Ltda., a Sao Paulo brokerage that handles more than a quarter of all Brazilian spot- market currency trades. The central bank's sale yesterday of the currency insurance made it less likely demand for dollars will rise allowing their bets to pay off.

The central bank slapped a lot of people yesterday,'' Ozaki said. There are about 30,000 more dollar futures contracts out there betting the dollar will strengthen than weaken. Yesterday's sale has pulled the rug out from them and made anyone else ready to bet against the real think twice.''

Many treasury desks were forced to stop adding to their positions yesterday, said Flavio Farah, head of the Treasury desk at the Sao Paulo unit of Dusseldorf, Germany-based Westdeutsche Landesbank Girozentrale.

Betting against the real right now makes no sense,'' Farah said. It's going to be a while before we figure out just what to do for the medium term.''

Bond Sales

In the meantime, capital flows to the country continue, boosting demand for the real and helping it rise. More than $8 billion of bonds and loans have been contracted abroad this year, according to the O Globo daily newspaper, helping the real outperform all the world's major currencies.

The real got an added lift in afternoon trading in Sao Paulo after Banco Safra SA said it plans to sell at least $75 million of two-year bonds to yield 5.5 percent to 5.75 percent. Morgan Stanley has been hired to manage the sale.

Telesp Celular Participacoes SA, based in Sao Paulo and Brazil's biggest cellular telephone service provider, said it plans to sell $150 million of 18-month bonds. Telesp Celular Par is controlled by Vivo, a joint-venture between Madrid-based Telefonica SA and Lisbon-based Portugal Telecom SGPS SA.

Car Exports

Brazil's auto manufacturers said exports of automobiles rose 8.6 percent in May to 50,400, the highest monthly amount since at least June 1997, from 46,395 in April.

Capital flows remain strong and the swap sale makes it easier for the flows to cause the real to rise,'' Ozaki said. There are few forces now preventing the dollar from weakening'' against the real.

A stronger real will help reduce inflation by reducing the costs of imports and commodities, which are priced in dollars.

In Brazil's capital, Brasilia, a committee of Brazil's lower house of Congress said a bill to limit pension expenses is constitutional, moving forward plans designed to help the government eventually reduce its $400 billion debt. Reduced default risk may make investors more willing to invest in Brazil.

Rate Backdrop

In coming days expectation the U.S. will cut interest rates may lift the real further. Much of the rally in Brazilian bond prices in recent months has been fueled by U.S. and European investors seeking higher returns than they can receive at home.

Brazilian banks have taken advantage of low U.S. rates -- yields on two-year U.S. Treasury bonds fell to a 53-year low of 1.198 percent this week -- to invest at Brazilian rates. Brazil's benchmark 26.5 percent rate is at a four-year high.

Lower U.S. rates could maintain the difference between U.S. and Brazilian rates that has sparked the bank bond sales even if Brazilian rates were to fall.

Investors are focusing on the possibility of another U.S. interest rate cut by the Federal Reserve as soon as its June 25 meeting, said Daniel Katzive, a currency strategist at UBS Warburg, the biggest trader in the $1.2 trillion-a-day foreign exchange market, in Stamford, Connecticut. ``The currencies that have done best are the ones with the highest yield.''

Brazil's benchmark 8 percent bond maturing in 2014 gained 1.06 cent to 91.38 cents on the dollar, its highest close ever, causing the yield to fall to 10.11 percent, according to J.P. Morgan Chase & Co.

Mexico, Regional Currencies

The peso rebounded from its biggest plunge since Brazil devalued its currency in January 1999 by gaining for the first day in three.

The peso strengthened 0.3 percent to 10.5433 per dollar from yesterday's 10.5725 per dollar close, when it fell 2.7 percent, the currency's largest one-day decline since Jan. 13, 1999.

Colombia's peso rose 0.1 percent to 2,838.50 per dollar. The Argentinean and Chilean currencies were little changed. Peru's new sol weakened 0.1 percent to 3.4837 per dollar. Venezuela fixed its bolivar at 1,598 this year.

Thursday, June 5, 2003 06:41 PM ET CARACAS -(<a href=www.quicken.com>Dow Jones)- Oil ministers of Venezuela, Mexico and Saudi Arabia will gather Friday in Madrid to discuss current world oil markets and cooperation of non-OPEC oil producing nations, a spokeswoman of the Oil Ministry said Thursday.

Venezuela's Oil Minister Rafael Ramirez was earlier Thursday quoted as saying he would meet his Saudi Arabian counterpart Ali Naimi and Mexico's Ernesto Martens in the Spanish capital Monday, June 9. "The meeting is Friday afternoon, " the spokeswoman said, adding the three would start their meeting at 1800 local time.

The spokeswoman added Ramirez will travel to Norway on Monday to meet his Norwegian counterpart. Ramirez is set to arrive in Doha in Tuesday afternoon.

Oil ministers from the three countries have met on a regular basis during the past few years in an effort to coordinate oil output policy. Mexico, a major non-OPEC member, has been cooperating with OPEC.

The meeting of the three oil ministers comes just before the Organization of Petroleum Exporting Countries, or OPEC, meets in Doha, Qatar, June 11. OPEC has to decide whether to curb production in an effort to anticipate the return of Iraqi oil exports.

OPEC in April decided to hike the ceiling to 25.4 million barrels a day while at the same time, it pledged to remove 2 million b/d from the market.

By Fred Pals, Dow Jones Newswires; 58414-2887461; fred.pals@dowjones.com

President Chávez's foes made all they could to impede, at least for one hour, the approval of a reform to the Parliament's internal regulations

ELVIA GÓMEZ EL UNIVERSAL

"There will be no peace in the National Assembly as the ruling party MVR tries to use the Parliament as it wishes," said representative Enrique Márquez (opposition party LCR) still agitated after the clash in the Congress that cost him his glasses.

In fact, a minority group from the opposition seemed unwilling to give in to their efforts to avoid what they considered an abuse by pro-government parliamentarians. However, most of the opposition congressmen warned that the great news of the week -that pro-government factions lacked the necessary votes to impose their will, according to the opposition- was not evident because of the chaos at the National Assembly.

Congressman Julio Borges (opposition party Primero Justicia) said that Wednesday's incident was "a point of inflection" and that opposition groups were forced to react as they did. He warned the situation was the prelude of a government plan to shut down the Parliament.

Henry Ramos Allup (opposition party AD) rejected the call hastily made by the Parliament president, Captain Francisco Ameliach (R), to hold a session on Friday at El Calvario, an allegedly pro-Chavist area of Caracas.

Even though the rules governing the Parliament provide for the possibility to hold sessions out of the official premises, holding such a session must be decided by the Parliament, which was not the case yesterday. Besides, the congressman said, pro-government groups seek to expose their opponents to the attacks of "political criminals." He also said that the opposition would not accept the ruling party's efforts to continue controlling the Parliament on the ground of its scanty advantage.

According to assemblyman Felipe Mujica (MAS), the main victim of incidents at the lawmaking body is democracy. He regretted that the Parliament is now ruled by intolerance.

Leopoldo Martínez (Construyendo País) set clear that the ruling party could not introduce any reform to the Parliament internal regulations because two appeals against previous changes were filed before the Supreme Court of Justice (TSJ) by opposition congressmen. He explained that as the court had made no decision on the appeals, only the TSJ could rule on the issue.

The reform to the internal regulations of the National Assembly makes it possible to create regular committees without quorum and to declare valid decisions made without the minimum number of votes previously required. The reform also intends to eliminate the Legislative Committee -in charge of two controversial draft bills, the Radio and Television Responsibility Law and a reform to the Supreme Court of Justice Law, both promoted by the Executive Power. The government does not have a majority in this committee.

According to opposition leaders, the reform is a violation of the pact reached at the Negotiation and Agreement Table and recently signed by the parties. "We are aware of the need for a consolidation of the pluralism provided for in the Constitution. Venezuela needs the participation of all the sectors to continue its path in peace and democracy, so that each and everyone may express his or her ideas, adopt his or her respective position, and make decisions choosing among the different political options that exist," states article 5 of the agreement reached at the Negotiation Table.

Reuters, 06.05.03, 6:02 PM ET CARACAS, Venezuela, June 5 (Reuters) - The world's biggest mobile phone maker, Finland's Nokia Corp. (nyse: NOK - news - people), sees Latin America's mobile phone market doubling in size to more than 200 million users by 2010, a company executive said Thursday. Lauri Kivinen, Nokia's Vice President for Corporate Communications, said in a video conference broadcast from Mexico that the number of mobile phone users in Latin America reached 101 million last year. The region currently accounts for six percent of the Finnish company's world sales. "In the next six years, the (mobile phone) users' base in Latin America is going to double," Kivinen, speaking through an interpreter, said in the broadcast to audiences in Argentina, Chile, Colombia, Peru and Venezuela. The Nokia executive added, however, that this projected market growth would depend on whether the cost of mobile phone services could be kept accessible for the inhabitants of Latin American countries, many of which are experiencing economic problems. "The tendencies for the coming years will be based on the general growth of mobile phone services, the displacement of fixed-line telephones by mobile phones and by the strengthening of the GSM (Global Standard for Mobile Communications) open standard," Kivinen said. He added Nokia's share of the mobile phone markets in Latin American countries was higher than its 38 percent global market share, but he did not give a nation-by-nation breakdown. Nokia has a presence in 35 Latin American and Caribbean countries and operates assembly plants in Brazil and Mexico.

Reuters, 06.05.03, 5:37 PM ET CARACAS, Venezuela, June 5 (Reuters) - Venezuela's Supreme Court on Thursday rejected a lawsuit that sought to suspend the state's tough currency controls, but the tribunal must still rule on whether the curbs are unconstitutional. The government introduced the foreign exchange regime four months ago to halt capital flight and a slide in the local bolivar currency after a two-month opposition strike failed to oust President Chavez but sent the economy reeling. A group of lawyers, some representing business clients, have introduced several petitions in an attempt to have the control system declared unconstitutional. "This means that (the court) has rejected the petition to suspend the effects of the currency controls while they decide on whether they are constitutional," one attorney, Henry Pereira, told Reuters by telephone. The control regime, which followed the shutdown of the foreign exchange market from Jan. 22, has been criticized by private sector representatives and even government officials for its slow allocation of dollars to an economy that relies on imports for 60 percent of its consumer goods. A central bank director, Armando Leon, warned Wednesday that the economy of the world's No. 5 oil exporter would sink deeper into recession if the currency board kept its tight strangle hold on the access to U.S. currency. Joining the chorus of criticism of the currency controls, the Venezuelan-German Chamber of Commerce and Industry Wednesday called on the government to ease the curbs to help companies already struggling with the recession. Venezuela's gross domestic product (GDP) slipped nearly 30 percent in the first quarter of 2003 as it was battered by the strike that choked off vital oil output and squeezed by the drought in dollars caused by the currency curbs. While the government argues it has managed to bolster international reserves and the investment image of the country, opposition and private sector representatives say the curbs have worsened the economic crisis, increased unemployment and driven up inflation.