|
PureBytes Links
Trading Reference Links
|
The funds available to the central bank of Brazil are always going to be
small in leverage terms to that which can be employed by most Banks, Hedge
funds etc. Central banks generally do not use derivatives (apart from some
of the more racy Asian CBs) so for every 1 unit of intervention they are up
against 10 to 20 times of leverage.
I also have nothing against Brazil but I don't believe any central bank can
win against the enormity of the global markets. Even the Moral authority
of the Bundesbank or Fed is finite although the theory has never been
tested and lets hope it never is.
Regards
Philip
----------
> From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
> To: alfredo.simas@xxxxxxx
> Cc: omega-list@xxxxxxxxxx
> Subject: Re: Brazil!
> Date: 11 September 1998 17:38
>
> Alfredo:
>
> I wouldn't compare brazil with Russia. But as a very long-time currency
trader,
> I've seen alot of central banks flex their might, and heard every country
say
> that their box of tools would thwart speculators. The truth is, if a
country
> wants the luxuries that capital flows from outsiders brings, the country
must
> also be beholding to market forces. Countries, like people, can't always
have it
> both ways. And the longer a central bank remains under pressure from
market
> forces, the more disasterous the effects will be when the market forces
force
> the central bank to stand aside.
>
> That's my opinion. I don't dislike Brazil. I hope you don't take it
personally.
> It's trading.
>
> Best,
>
> Tim Morge
>
> alfredo.simas@xxxxxxx wrote:
> >
> > Hi Netters,
> >
> > Iīve been watching commentaries about the melt down of Brazil
> > recently in this list. I would like to add to these my opinion.
> >
> > Do not bet against Brazil. Brazil is very rich.
> > Speculators have already been severely punished during march
> > 1995 and mildly so last october.
> >
> > On march 1995, under the first severe attack, the Brazilian stock
> > market fell around 20% in one day. That morning, during the heat of
> > the attack, the Brazilian Central Bank devalued the currency
> > slightly, only to entice speculators to short sell the Real even
> > more.
> > When they did it enough, the Central
> > Bank rose the Real's quote and bought it all back making a
> > handsome profit for the country. The speculators were severely
> > battered then.
> > I guess this time the strategy will be different but the Brazilian
> > Central Bank has megatons of dollars to unload at anyone.
> > Brazil is not Russia! Brazilīs economic team is orders of
> > magnitude more competent. Brazil may not have nuclear weapons
> > but, on the other hand, the Brazilian financial weapons are infinitely
> > more strong than those of Russia.
> >
> > Alfredo
|