Monday September 10, 3:50 pm Eastern Time Brazilian real sinks to 2.608/dollar, record low SAO PAULO, Brazil, Sept 10 (Reuters) - Brazil's currency, the real, weakened 0.9 percent on Monday to its lowest point ever as new pessimism over the state of the U.S. economic slowdown and its effect on the rest of the world rattled investors.

The real (BRBY - news) slipped to 2.608 reais per U.S. dollar from Thursday's closing level of 2.584. Financial markets were closed on Friday in Brazil for the Independence Day national holiday.

Monday's depreciation left the real at its lowest point since the currency was introduced in 1994 and at its weakest level in the day. The real has lost about a quarter of its worth so far this year.

``There is a renewed wave of pessimism relating to the recovery (of the U.S. economy). That made markets across the globe fall, and Brazil is feeling that,'' said Paulo de Sa Pereira, director of strategy at Lloyds TSB.

A surge in the U.S. unemployment rate to a four-year high of 4.9 percent, reported on Friday, crushed markets that were already reeling amid concerns over slumping corporate profits. Investors prefer to hold their capital in dollars at times of turmoil in world markets, since emerging market currencies are more susceptible to wide swings in sentiment.

This may not seem like a big deal but it sends ripples through the pond, I assure you.

-- Guy Daley (guydaley1@netzero.net), September 10, 2001

Answers

This is more than a ripple. When an economy as large as Brazil's loses 25% of the value of its currency in just eight months, and now 1% in just one day, this is a real wave, bordering on tidal. Even without Argentina, this alone could take down the entire Latin American economy.

-- Wellesley (wellesley@freport.net), September 10, 2001.

I need some help here as to the potential ramifications as far as the U.S. is concerned. Basically our goods will become or have become too expensive for Brazilian residents to buy, conversely anything they export to us will become real cheap, mitigated by their inflation rate of course. They might be able to export more but then they're hampered by there energy crisis, a sideline issue. I guess the purchasing power of the typical Brazilian all depends on the inflation rate. Other than, the fact that Argentina and Brazil have become two very weak cards at the bottom of a house of cards, how else will this effect America? Maybe we can expect a tidal wave of Brazilian illegal immigrants next? Any other ideas?

-- Guy Daley (guydaley1@netzero.net), September 10, 2001.

Good evening everyone!

Guy,

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-- Deb Mc. (not@this.time.pls), September 10, 2001.

With their industrial production down a whopping 15% since institution of their energy Scroogery on June 1, Brazil will not be able to export its way out of a paper bag to solve its problems.

-- Billiver (billiver@aol.com), September 11, 2001.