Crisis development damps deals
Topic 1Gazeta Mercantil Online (Brazil)Crisis development damps dealsAugust 15, 2005 MondayThe humor of investors will continue to be oriented by the political crisis. In the exchange market, the outlook is for days of volatility and low liquidity. Investors prefer to await the unwinding of the denunciations against the Workers Party (PT) to place their bets. The testimony of publicist Duda Mendonca before the Congressional Investigative Committee (CPI) into the Post Office (Correios) last Thursday put at risk the so-called armoring that has been separating the financial market and the political crisis. The commercial dollar traded on the Brazilian market closed the week with two consecutive rises, reflecting the heating crisis and also the return of the Central Bank (BC) to the exchange market. On Friday, with all the attention focused on the pronouncement of president Lula, the rise was 1.11%, closing the dollar at R$2.373 to sell. The accumulated increase for the week was 3.35%. The high volatility, according to exchange operators, should keep the BC out of the market for the time being. "I think that the BC itself, when it announced the auction Thursday, was not expecting such a strong dollar, and for the time being I believe it will be difficult for the institution to return to the purchases," said Hideaki Iha, of the Souza Barros brokerage. After five months absent from the market, the BC promoted an auction to buy on Thursday, but it closed no trades. The banks asked more than what the BC was disposed to pay.
