December 4, 2007

US financial crisis hurt Brazil currency

Brazil's real fell the most in a week on speculation losses at the U.S. financial sector will trigger a slowdown in the global economy, reducing demand for emerging- market assets. Brazil's currency dropped 0.9 percent to 1.8088 per dollar at 1:09 p.m. in New York. The real has appreciated 18 percent against the dollar this year, the most among the 16 most actively traded currencies tracked by Bloomberg News.

The central bank bought U.S. dollars as part of a strategy to boost international reserves and slow gains in the currency. The bank bought dollars for 1.8275 reais each in an auction. The costs of short-term loans in the dollar, euro and pound increased as banks hoard cash on concern that losses stemming from U.S. subprime mortgages will spread, prompting investors to sell higher-yielding assets funded by borrowing in Japan and Switzerland.

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