- SAO PAULO, Brazil
(UPI) -- Brazil's currency hit another all-time low Monday in the
wake of recent criticism by a U.S. official and the continued success of
opposition candidates in presidential polls.
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- Before leveling off at 3.175 to the U.S. dollar, the
real hit an intra-day low of 3.29 to the dollar, leaving investors jittery
amid concerns about the future of Latin America's largest economy.
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- Monday's losses were the latest in a series of hits to
the real in the last week, which posted several days of all-time lows.
Only five months ago, the Brazilian currency matched up at around 2.2 to
the dollar.
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- Panic ensued around midday when rumors that the latest
opinion poll would show both opposition candidates pulling further ahead
of Jose Serra, Wall Street's favorite and President Fernando Henrique Cardoso's
handpicked successor.
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- Serra is the candidate most expected to continue the
Cardoso administration policies that instituted 8 years of relative economic
stability in Brazil.
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- On the other hand, leftist candidate for the Workers'
Party, Lula Inacio Lula da Silva, and center-left front man for the Popular
Socialist Party, Ciro Gomes, have frightened investors with talk of restructuring
Brazil's $250 billion public debt.
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- A four-time presidential hopeful, "Lula," as
he is commonly known, has toned down his fiscal reform rhetoric in recent
months and promised to honor the debt. Gomes, however, has made no such
promise and even antagonized investors with speculation that he would call
for a restructuring of the debt, or even default on it.
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- A poll released Friday showed Lula with 33 percent of
the intended votes, followed by a rapidly gaining Gomes with 26 percent.
Serra is trailing both candidates by double digits with 13 percent.
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- Brazilians head to the polls on Oct. 6. If no candidate
wins a majority of the vote (more than 50 percent) a runoff between the
top two candidates -- scheduled for Oct. 27 -- win determine the nation's
next leader.
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- Many analysts predict Lula and Gomes will battle for
the presidency in the second round, with Gomes winning by a slight margin.
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- Increasing calls by Cardoso to quell speculation about
Brazil's future leadership have gone unheeded in recent weeks and he attempts
to ease the minds of investors both foreign and domestic.
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- "Our fundamentals are in great shape," said
Cardoso Friday from the South American Summit in Guayaquil, Ecuador. "However,
the markets are worried about what could happen in a future administration.
I do not see any sense in this, no matter who the president is."
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- The Brazilian leader's assurances fell on deaf ears in
Washington, as U.S. Treasury Secretary Paul O'Neill over the weekend criticized
Argentina Uruguay and Brazilian for lapses in honestly from their respective
leaders -- apparently a not-so-subtle allusion to alleged political corruption.
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- O'Neill is scheduled to visit the region next month.
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- Meanwhile, the Brazilian government will send an official
delegation -- head up by Finance Ministry Executive Secretary Amaury Bier
-- to Washington for meetings Wednesday to "continue negotiations
with the International Monetary Fund," Agencia Estado reported.
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- Brazil's Finance Minister Pedro Malan and IMF Managing
Director Horst Kohler arranged the meeting, saying negotiations for a possible
new agreement with the IMF "have been intensified."
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- Copyright © 2002 United Press International. All
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