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Falling Brazilian Real Leads Argentina to Fear 2001 Debacle Encore PDF Print E-mail
2008 - October 2008
Written by Newsroom   
Tuesday, 14 October 2008 23:13

A 20 reais bill The powerful industrial lobby of Argentina is warning that the current real exchange rate with Brazil is back to "2001 levels," when Argentineans saw the preamble of the worst economic crisis suffered by their country in a century.

The Argentine Industrial Union message was made public on Tuesday when the Argentine peso rebounded against the US dollar closing trading at 3.23 pesos.

"The recent depreciation of the Brazilian real of almost 40% has left the real exchange rate with Brazil at the deteriorated level of 2001," said UIA in a release. Brazil is Argentina's main trade partner.

The strong lobby called on Argentine authorities to recall the impact that the 60% devaluation of the real had on Argentina ten years ago in terms of exports, production and employment."

The president of UIA, Juan Carlos Lascuarin, from the metal industry and a close ally of the Kirchners warned that "if the situation continues, economic evolution will repeat the reiterated problems which have been experienced by the country".

In first place "we will see a slowdown in economic growth (if the automobile industry and basic metals had not been included the performance of industry would have fallen 1.9% this year, and this before the current financial crisis)," warned the UIA.

This is followed by problems with payments to suppliers, revenue for the government and finally on employment and the labor market, added UIA.

The release was made public when Argentine stocks and bonds rebounded as assets, which were not traded Monday because of a holiday, played catch-up with the previous day's gains in the US and Brazilian markets.

The Merval index rose 10.99% to 1,349.69, though it had been up by more than 14% in early trade.

However in spite of the impressive rebound traders say the market has a long way to go before investors really regain lost confidence in emerging markets such as Argentina amid the global financial crisis.

The index heavyweight and Brazil state-run oil giant Petrobras (APBR) rose 26.90%, while Petrobras Energia (PBE), rose 18.51%. Steel tube maker Tenaris (TS), the performance of which is closely tied to that of the energy sector, jumped 15.65%. Other energy and financial shares were also up.

"Stock prices on the exchange are really risible," said Adelmo Gabbi, president of the Buenos Aires Stock Exchange. "These are really ridiculous prices. Whoever invests today is going to make money. It's guaranteed."

Meanwhile the Argentine peso gained ground against the US dollar, closing at 3.21 from 3.223 on Friday. The peso had been dropping at a rate of about one centavo a day in recent days.


Comments (1)Add Comment
Quite Funny....
written by ch.c., October 15, 2008
...that the "so strong" Real is falling against the....Argentina Peso, itself a weak and a junk currency !!!!!
What is Lula's view ?
What is Ricardo Amaral, Elite Trader's view ?
What are the views of so many brazilians junkies in this site ?

1) Dont tell you havent been warned. Of course I was the one ranting. In a Brazilian mind, saying the truth is obviously ranting !
2) Hopefully you also remember what I said about Argentina ! Nothing glory ! Argentina has a relatively high probability to DEFAULT once more. If they default dont say it wont hurt Brazil straight where it wont be : the Brazilian Currency !
3) Your Us$ 200 billion foreign currency reserves is not that high, contrary to what you have swallowed. Because if it goes below
$ 100 B. you are going to request the IMF and World Bank usual !
4) And selling the US$ to support your own currency already started ! Your economy is larger than before, therefore $ 100 B is as easily spent as 50-70 your previous meltdown.

Ohhhhhh who has paid attention yesterday that Petrobras made a new oil disccovery ? Did it help your stock price today ?????
Therefore my cynical comment stating that every time Petrobras make a new oil discovery, the stock price come down is not that cynical, but a simple and proven fact !!!!!

Dear Brazilians Junkies,
Do Chinese and Indians stopped EATING and stopped importing oil and iron ore.
Was it not your THEORY & ANALYSIS ?
What Great Economists, Analysts and Visionaries you ALL are !
A country having the World Highest Interest Rate after inflation, is a sign of weakness...or your views !
Then tell Meireles and Bin the Crook to invest in Turkish Lira. They have similar rates than yours ! It should be good to clip the coupons on their Government bonds.

You got it ALL WRONG !
Robin the Crook always told you "look there" (elsewhere)....meaning "not here" (in Brazil), and you did !
Pickpockets do the same ! What a simple trick it is !
As I said so many times nothing is in harmony in what you do. The way you do will automatically CORNER you, sooner or later.
And so you did and continue to do...once more usual !

If I am not too wrong you ALL were sure that oil should be at $ 200.- by now !
Grains should have been 20-30 % higher than their top, by now !!!!!
Metals too !
But also Coffee, Orange juice, Cotton, Sugar and Ethanol !!!!!

Right ? used the same spread sheet and software than the U.S. & Europeans lenders, including UBS !!!!!!!!!!!


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