By Michael Smith

Rio de Janeiro, April 28 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's currency surged after the country's central bank chief said it has more room to gain after this year's 19 percent rally.

The real rose 1.5 percent to 2.9650 per dollar at 2:31 p.m. New York time, after Bank President Henrique Meirelles said ``we still have lots of room to see the currency appreciate.'' The real is the second-best performing currency among the 59 tracked by Bloomberg. The Argentine, Colombian and Chilean pesos rose.

The gains extended a rally that's boosted the value of the real 13 percent in April, threatening to curb exports by making Brazilian products more expensive abroad, some government officials have said. The gains, fueled by confidence President Luiz Inacio Lula da Silva will cut spending and make public debt payments, has divided the ruling coalition over mounting a bid to slow the currency's gains.

The real will keep gaining to reflect the flow of dollars from investment and exports,'' said Flavio Datz a trader with Agora DTVM, a Rio de Janeiro brokerage. Meirelles just made it clear the market will set the price, not the government.''

Meirelles, referring to analysts' concern about the rising currency, said in a speech to the Council of the Americas in Washington that there's no reason to worry.'' The real is still undervalued'' when compared with the average for a basket of 15 currencies since 1985, Meirelles said.

Exporters

The real gained earlier today after Meirelles and Brazilian Finance Minister Antonio Palocci last week said the government won't try to halt the currency's climb to boost exports.

I don't think there will be any intervention,'' Sergio Haberfeld, chairman of Dixie Toga SA, a Brazilian plastic container maker that gets 12 percent of revenue from exports. For an exporter, the higher the dollar the better.''

For Dixie Toga, a real at 3.10 per dollar would be ideal for boosting exports across Latin America, said Haberfeld.

If the currency strengthens beyond 2.8 per dollar, the government likely will try to reverse the trend to ensure exports remain competitive, said Sergio Machado, head of the Treasury desk at Banco Fator SA in Sao Paulo.

The Planning Ministry's chief economist Jose Carlos Miranda on April 25 said the stronger currency is curbing exports and the government plans to limit the real's rise by refusing to refinance securities linked to the dollar.

Brazil is enjoying record exports of soybeans, cars, iron ore and other goods and this year, and Lula has made boosting exports the lynchpin of efforts to boost economic growth.

Brazil's benchmark 8 percent bond maturing in 2014 rose for the fourth day in five, adding 0.19 cent on the dollar to 85.94, paring the yield to 11.55 percent, according to J.P. Morgan Chase & Co.

Regional Gains

Argentina's peso rose for the fifth day in eight to extend its 18 percent gain on the year after the country's presidential first-round vote yesterday.

The peso rose 0.7 percent to 2.8575 per dollar from 2.8780 last week.

Former President Carlos Menem won 24 percent of ballots, based on 78 percent of the vote counted in yesterday's presidential election. Nestor Kirchner, governor of Santa Cruz province, won 22 percent.

Both are Peronist Party members and will face off in a second round of voting on May 18.

Colombia's peso extended earlier gains to rise for the fourth day in six after the central bank raised the overnight lending rate 100 basis points to 7.25 percent.

The currency strengthened 0.9 percent to 2,885 per dollar, its strongest level since Jan. 7, after the bank's second rate increase this year in a bid to slow inflation.

Chile's peso rose for the first day in three, gaining 0.7 percent to 708.35 per dollar from 713.25 last week.

Mexico

Mexico's peso rose for a fourth day to it highest level since early January, pacing gains by U.S. stock markets amid optimism for renewed growth in the world's biggest economy and Mexico's largest export market.

The peso rose 0.3 percent to 10.3768 per dollar from 10.4117 last week, raising its gain in April to 3.8 percent.

The U.S. buys about 85 percent of Mexico's exports, which account for about a quarter of its $600 billion economy, and provides Mexico with about 70 percent of its foreign direct investment.

Peru's new sol strengthened 0.1 percent to 3.4636 per dollar, and has gained 1.5 percent in 2003. Venezuela's bolivar was fixed at 1,598 per dollar earlier this year. Last Updated: April 28, 2003 14:31 EDT

Reuters, 04.28.03, 1:59 PM ET

SANTIAGO, Chile, April 28 (Reuters) - A U.N. body predicted on Monday that Latin America and the Caribbean would leave behind its economic woes to grow near 2 percent in 2003 but warned that global uncertainty could jeopardize that recovery. The end of Argentina's grueling recession, stronger foreign trade and better access to financing should all support moderate growth, following a 0.6 percent contraction last year, the Santiago-based U.N. Economic Commission for Latin America and the Caribbean said in a report. ECLAC conservatively said growth might fall within a range of 1.5 percent to 2.0 percent, listing the threats as oil price volatility, poor demand in the region's top trade partners, the conflict in Iraq and political turmoil in Venezuela. Earlier this month, ECLAC's chief economist Jose Antonio Ocampo informally ventured the same growth predictions, which have now been made official. Argentina, where presidential candidates are wooing investors ahead of a second round vote on May 18, is expected to surge ahead of the rest of the region, along with Peru, to show economic expansion of 4 percent, ECLAC said. Brazil, the region's largest economy, should grow by 1.8 percent this year, Mexico by 2.4 percent and Chile by 3.5 percent. But Venezuela, mired in a political crisis after a two-month opposition strike, should drag down the regional average, with its economy shrinking 10 percent this year, ECLAC estimated. The expected LatAm growth is still too weak to cut overall poverty rates, according to the organization, which said per capita GDP has declined in half the region over the past five years. "The expected regional GDP growth of close to 2 percent for 2003 will allow a slightly positive per capita growth, though it's too modest to expect an improvement in the region's social situation," ECLAC said.

By Todd White

Madrid, April 28 (<a href=quote.bloomberg.com>Bloomberg) -- Santander Central Hispano SA, the largest bank in Spain and Latin America, said first-quarter profit fell 8.7 percent, hurt by declines in the Brazilian real and Mexican peso. The bank said it is ``optimistic'' about 2003.

Net income dropped to 613 million ($677 million), or 13 cents a share, from 671 million euros, or 14 cents, in the year-ago quarter, bank officials said. Discounting the effect of lower currencies against the euro, profit rose 21 percent.

Chairman Emilio Botin, 68, has begun hedging foreign exchange risk to better protect earnings for the rest of 2003. He's also expanding in Europe, cutting the bank's reliance on Latin America, which earned 38 percent of profit in the quarter.

This company has changed radically from what it was a year ago,'' Chief Financial Officer Francisco Gomez Roldan said in an interview. The bank's foreign exchange volatility is now at a minimum,'' he said.

The value of Santander's Latin American investment exposed to currency fluctuations fell to 2 billion euros at the end of the quarter from 7.6 billion euros a year earlier, partly by hedging against the Mexican and Chilean pesos, Gomez said today.

``Now their risk is smaller a region where growth prospects are improving.'' Jose Manuel Jimenez, who helps manage the equivalent of $7.7 billion at Grupo Generali in Madrid.

The economy of Latin America and the Caribbean will grow 1.5 percent this year compared with a 0.1 percent contraction in 2002, the International Monetary Fund forecast this month.

Shares

Santander's shares have gained 20 percent over the last three months as the real has started to reverse a yearlong decline. Santander owns Brazil's largest foreign bank, its biggest investment outside Europe. The performance of the stock tops the 13 percent increase in the 78-member Bloomberg Europe Banks and Financial Services Index.

Today, the bank's shares rose 2.3 percent to 7.10 euros.

Chairman Botin said in a statement that the group's dynamism, loan quality, efficiency and our solid capital base permit us to be optimistic facing 2003,'' Three months ago, presenting fourth-quarter earnings, Botin said 2003 would be a difficult'' year.

``We think the worst is now behind us in'' Latin America, Gomez Roldan told a press conference.

Latin America

Latin American profit fell 13 percent to 385 million euros in the first quarter. In constant foreign exchange it would have risen 34 percent, the bank said

Earnings from the region probably will account for 29 percent of Santander's total profit this year, down from 35 percent in 2002, according to analysts at Morgan Stanley.

European consumer banking profit rose 13 percent to 413 million euros in the first quarter.

In Europe, Santander is opening 100 branches and hiring 500 mostly sales employees at its flagship Spanish bank after three years of cutbacks. It's also expanding in consumer financing in Italy and Germany. That's reducing its reliance on Latin America.

Santander's interest in Germany doesn't include acquisitions. The bank has ``zero'' interest in buying in Germany, Gomez Roldan said.

Santander may return to annual profit growth in 2003, boosting net 6 percent, helped by European retail banking and corporate banking, Merrill Lynch & Co. analyst Jose Luis de Mora forecast before the earnings.

Provisions

Gomez Roldan said he expects write-offs and provisions for loan losses to ``remain stable this year.'' Provisions fell by one- third to 333 million euros in the first quarter, the bank said.

First quarter profit was up 17 percent on fourth-quarter profit. Some analysts said quarterly comparisons were more important because of the currency effects.

In the first quarter, the real was down 44 percent against the euro compared with the year-earlier quarter while the Mexican peso dropped 31 percent and Venezuela's bolivar plunged 58 percent.

Brazilian profit, down 18 percent to 197 million euros, would have risen 26 percent at a constant exchange rate.

That compares with a 41 percent drop to 50 million euros at the Brazil division of ABN Amro Holding NV, the second-largest foreign bank in that nation. Overall first-quarter profit at ABN Amro, the biggest Dutch lender, jumped 74 percent to 690 million euros, aided by job cuts and branch closures.

Santander's income from long-term investments fell 30 percent to 124 million euros, undercut by more than $7 billion of asset sales last year in profitable companies.

Asset Sales

The bank had to sell assets last year to improve investor confidence and solvency,'' said David Manso, who helps manage $1.6 billion, including Santander shares, at Gesatlantico SA in Madrid. Part of the result you see now is less recurring income.''

Botin sold assets to boost the bank's ratio of reserves and other core capital and protect its bond rating. Core capital is now 6 percent of assets compared with 4.4 percent at the end of the third quarter.

The sales included a 3 percent stake in Royal Bank of Scotland Group Plc for 2 billion euros, 25 percent of its Serfin Mexican bank unit for $1.6 billion, and a Peruvian consumer bank and mutual fund business.

Lending income fell 23 percent to 1.9 billion euros, also hurt by lower currencies. Eliminating the foreign exchange effect and removing the stalled Argentina business from the earnings, lending income would have risen 2.1 percent, Santander said.

Total loans fell 4.1 percent.

In Spain, Santander has been hurt by lower benchmark interest rates. Its interest spread narrowed to 2.71 percent from 2.91 percent in the 12 months ended Dec. 31. That's the difference between what the bank earned on assets such as loans and what it paid on deposits and other liabilities.

Santander's profit had been expected to fall to 607 million euros, according 10 analyst estimates.

Divisional profit was stated before ordinary write-offs for goodwill, the bank said. Last Updated: April 28, 2003 12:36 EDT

<a href=www.thescotsman.co.uk>thescotsman.co.uk REED LINDSAY IN BUENOS AIRES

WHEN Argentina erupted in spontaneous protests and political upheaval 16 months ago, there was impassioned talk of revolution as public opinion veered sharply to the left.

Yet the country’s political elite held firm and when Argentines vote for their next president tomorrow, they will be faced with an uninspiring field of aspirants, led by right-wing former president Carlos Saúl Menem.

Ironically, Mr Menem and his main rival, Ricardo López Murphy, a graduate of the University of Chicago, have promised to carry on with the kind of free-market policies that many blame for bringing the country to its knees.

The polls are saying the election will be one of the closest in decades, with most giving Mr Menem a narrow lead but all saying that a second round run-off will be required.

In the dying days of campaigning, rival candidates have attacked Mr Menem. Nestor Kirchner, the government’s candidate, blamed the former president’s 1989-1999 rule for the country’s devastating economic, social and political crisis.

But Mr Menem’s confidence is undimmed. When he appeared before a huge crowd at River Plate’s football stadium in Buenos Aires late on Thursday night, with his 37-year-old ex-beauty queen wife, Cecilia Bolocco, he blamed his successors for the country’s turmoil.

"I am returning. I am returning to rebuild the Argentine republic. I am returning to end hunger, to end poverty and chaos," said Mr Menem. He even invited the people to join him on 25 May at the Government House for the inauguration.

Yet the politicking cannot disguise widespread apathy and cynicism about the election. Indeed, the nation’s burgeoning social movements are boycotting it all together.

"We don’t think any change will take place through this election," said federal deputy Luis Zamora, a straight-shooting former Trotskyite who refused to run for president despite being near the top of popularity polls early last year. "Even if we won the election we wouldn’t be able to pass any laws because congress and the supreme court are the same. We would be fooling the population and legitimating the main parties, which only decided to convoke the election to stay in power."

After the resignation of the former president Fernando de la Rúa in December 2001, middle class Buenos Aires residents formed neighbourhood assemblies in parks and on street corners to co-ordinate pot-banging demonstrations and to discuss everything from the need to fix crumbling pavements to the illegitimacy of the external debt.

Workers seized control of more than 100 bankrupt factories nationwide, reinitiating production under self-management and establishing egalitarian salaries.

But unlike in Brazil, Bolivia, Ecuador and Venezuela, where surging social movements have helped sweep left-leaning candidates into office in recent years, no electorally viable political force has taken shape.

"I don’t feel represented by any political party," said Luis, 45, a member of a Buenos Aires neighbourhood assembly, as he held one end of a banner at a protest last week that read "QSVT", which stands for "They All Must Go".

The banner is part of an anti-election campaign organised by the assemblies, which have printed and distributed substitute ballots marked with QSVT. Many Argentines say they are planning on spoiling their ballots or not voting at all. But pollsters say abstentions will be small in comparison with the congressional elections of 2001, when some 40 per cent of Argentines did not vote for any candidate, dubbed voto bronca, or "angry vote".

"The electorate feels that voto bronca isn’t a solution because it ends up benefiting the very candidates it seeks to punish," said Santiago Lacase, an analyst with Buenos Aires-based polling firm Ipsos-Mora y Araujo.

"The only way they get people to vote is by instilling fear about the other candidates, not by talking about their proposals," said Mr Zamora. "A lot of people are voting out of fear that Menem will win. There’s the feeling that if he wins, and you didn’t vote, you’re somehow responsible."

<a href=www.lapress.org>LatinAmericaPres.org Defining times  Armando Chávez.  Apr 24, 2003

Following a decade of neoliberal policy in Latin America, grassroots movements dedicated to fighting unemployment, hunger, poverty and the business avidity of transnational economic groups, have emerged across the region.

Rooted in Brazil, Venezuela, Ecuador, Bolivia, Argentina and Uruguay, and backed by figures such as Brazilian President Luiz Inácio Lula da Silva, these movements have succeeded in arousing public interest in who they are and what they represent.