MercoPress. South Atlantic News Agency

Brazilean Real drops to nine year record past 2 dollar level

The worst collaps in ten years

Brazil's Real plummeted the most in nine years, weakening past the 2-per-dollar level, as a direct consequence of the US House of Representatives rejection of the 700 billion US dollars bailout package for the financial system.

The Real sank 6.1% to 1.9650 per dollar in mid afternoon trading from 1.8445 last Friday. The decline was the biggest since January 1999, when the government scrapped its defense of the currency and let it trade freely. Earlier in the day the Real dropped as much as 7.8% to 2.0014, its weakest since August 2007. Brazil's currency has lost 17% against the dollar this month. The Sao Paulo Bovespa index plunged 10%, and fell further after trading was reinitiated, leaving the index down 12%. Demand for emerging-market assets also eroded after European governments rescued financial institutions. The UK Treasury seized Bradford & Bingley Plc, Britain's biggest lender to landlords, while Belgium, the Netherlands and Luxembourg extended an 11.2 billion Euro lifeline to Fortis, the largest Belgian financial-services firm. The Real was also hurt by a tumble in commodity prices, which will push down the value of the country's exports of products such as coffee, sugar, soybeans and orange juice. Brazil's national development bank, BNDES received a 15 billion Real cash injection from the Treasury to aid companies facing tight credit markets. The bank will lend as much as 95 billion reais to Brazilian companies next year, bank President Luciano Coutinho told reporters in Sao Paulo Monday.