Brazil Currency Declines For a Third Day on Landless Invasions
July 7 (Bloomberg) -- Brazil's real fell for a third day on investor concern a Senate probe of land invasions by rural peasants may derail legislation before Congress aimed at paring the country's deficit and boosting growth.
The real fell 0.9 percent after new land invasions by the MST landless movement this weekend. The MST occupied three farms in Sao Paulo state, TV Globo said. Invasions jumped more than 50 percent in the first five months of 2003, compared to the same year-ago period, Credit Suisse Group said.
The Senate's invasion probe may make it harder for the government to reduce its pension deficit from about 5.5 percent of gross domestic product, said David Fleischer, a political scientist at the University of Brasilia in an Internet report. The invasion probe and an investigation of $30 billion in money transfers through the State Bank of Parana, or Banestado SA, in the 1990s may delay passage of tax and pension reforms aimed at increasing government revenue and slashing its liabilities.
``The landless movement, the Banestado probe and the (tax and pension) reforms in isolation wouldn't have much of an impact but taken together weigh on investors,'' said Alexandre Vasarhelyi, head of currency trading at ING Bank NV's Sao Paulo office.
Brazil's real fell 0.9 percent to 2.8645 per dollar in trading in Sao Paulo at 10:40 a.m. New York time. The real has gained 24 percent this year, the best performer against the dollar of the world's 16 most-traded currencies.
Brazil's benchmark 8 percent bond maturing in 2014 fell for a third day, losing 1.13 cent on the dollar to 86.38, boosting the yield to 11.52 percent, according to J.P. Morgan Chase & Co.