Brazil’s Bovespa stock index plunged Thursday to a three-month low, extending its drop in the past month to 12%, and the Real tumbled as concern Europe’s debt crisis will spread prompted investors to sell higher-yielding assets.
The Bovespa stretched its retreat from an almost two-year high on April 8 to more than 10%, marking a so-called correction. Vale S.A. (SAO:VALE5 / SAO:VALE5), the world’s biggest iron-ore miner, dropped 2.3% as metals price declined. Gol Transportes Aéreos (SAO:GOLL3 / SAO:GOLL4) plunged 5.4% after Brazil’s biggest airline by market value said first-quarter profit dropped 61%.
The Bovespa index (SAO:BVMF3) fell 2.3% to 63,414.22, the lowest closing level since Feb. 8, the biggest intraday decline since November 2008. The measure has dropped 7.5% this year. Sixty stocks fell on the index while six gained.
Meanwhile, the Real declined the most in almost one and half years, sinking 3.2% to 1.8551, from 1.7951 Wednesday. That is the biggest drop since Jan. 2009. Central Bank of Brazil said it bought dollars in the spot market in an auction today for 1.8660 Real each, even as the currency slumped.
The bank purchased dollars every trading day since May 2008 and bought them twice as recently as May 3 to prevent the Real from strengthening. The Real touched a three-month high of 1.7205 on April 30, two days after policy makers raised the benchmark interest rate 0.75 percentage point to 9.5%.