Brazil currency firms on bond issues, stocks slip
Posted by click at 9:42 PM
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Reuters, 04.04.03, 10:58 AM ET
SAO PAULO, Brazil, April 4 (Reuters) - Brazil's currency firmed slightly early on Friday, buoyed by news of local banks raising cash abroad, but stocks stumbled as investors took profits after a strong run-up.
After a brief stint in the red, the Brazilian real gained ground against the dollar for the sixth straight session, firming 0.6 percent to 3.235 to the greenback.
The gains, which left the real 9.6 percent stronger so far this year, came after Brazil's top private bank Bradesco <BBDC4.SA> said it had issued $250 million in 14-month bonds and offered 50 million euros in eight-month notes, becoming the latest in a rash of local companies to raise cash abroad.
On Thursday, the Banco Real unit of Dutch bank ABN AMRO <AAH.AS>(nyse: ABN - news - people) added another $100 million to a nine-month bond, bringing the total issue to $250 million.
"Companies just keep on raising cash, and that means more dollars flowing into the market," said Alexandre Vasarhelyi, head of foreign exchange at ING Bank in Sao Paulo.
The mood was also positive in the stock market, but share prices drifted lower as investors cashed in on profits following a 17 percent rally since the start of March. The Sao Paulo Stock Exchange's benchmark Bovespa <.BVSP> index slipped 0.56 percent to 11,939.1 points after closing at its highest level since Jan. 14 on Thursday.
"After a rally like the one we've seen over the past month, some profit-taking was bound to come at some point," said Daniel Lemos, an investment analyst at Socopa brokerage in Sao Paulo. "But the outlook remains positive, and proof of that are the bond issues we're seeing."
Brazil's stocks, bonds and currency have forged ahead over the past month as hopes mount that the new government of President Luiz Inacio Lula da Silva will manage to push through tough economic reforms seen as key to the country's fiscal health, like overhauling the costly tax and pension regimes.
News of the bond issue also lifted Bradesco's share price, which climbed 2.17 percent to 11.75 reais, making it one of the few stocks in positive territory.
The heavily-indebted energy sector, which has trekked higher of late in tandem with the real, was among the main targets of profit hunters.
Federal holding Eletrobras <ELET6.SA>, which jumped 7 percent on Thursday, was down 1.25 percent at 23.70 reais, while Sao Paulo state distributor Eletropaulo <ELPL4.SA> skidded 3.6 percent to 26.51 reais after surging 11 percent in just one day, but later rallied to 27.30.