Shares of giant Brazilian companies like Gerdau (NYSE:GGB), Vale (NYSE:VALE) and Petrobras (NYSE:PBR) were all down in trading Wednesday as the government of Brazil attempts to battle the long-term currency appreciation which threatens its economy.
The Bovespa, the equity index of Brazil (XX:BVSP), closed down 1.2 percent to 69,036.91 with all sectors tracking being in the red.
Brazil’s currency (USDBRL) fell against the U.S. dollar Wednesday dropping to 1.612 reals from 1.607 reals on Tuesday. The real has soared over 35 percent against the dollar since 2009.
Danske Research said for the next three-, six- and 12-month period for USD/BRL, they changed their outlook from 1.65, 1.68 and 1.70 to 1.55, 1.56 and 1.59.
Other companies from Brazil closing down in New York were Gafisa (NYSE:GFA), Banco Bradesco (NYSE:BBD), Banco Santander (NYSE:BSBR) and Itau Unibanco (NYSE:ITUB)
Recently Brazil's real has traded at its highest level against the U.S. dollar since August 2008.
All of this is important because of the heavy reliance of commodities in Brazil, which when its currency rises against the U.S. dollar, it undermines the profits.
Thursday, April 7, 2011
Gerdau (GGB) (VALE) (PBR) Pressured on Currency Strength
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