Brazil Real Falls on U.S. Recession Concerns, Stock Declines

By Adriana Brasileiro
March 4 (Bloomberg) -- Brazil's real weakened as concern that the U.S. economy is sliding into recession curbed demand for higher-yielding, emerging-market assets.
The real fell 0.8 percent to 1.6859 per dollar at 3:55 p.m. New York time, after most trading in Brazil had ended, following declines in U.S. stock markets that came after Federal Reserve Chairman Ben S. Bernanke urged banks to write down more mortgages.
``Markets are under the influence of a lot of turbulence right now and it's very risky to make short-term bets on the direction of local assets,'' said Mauro Cunha, investment director and partner at Maua Investimentos in Sao Paulo, which has more than $1.3 billion under management.
The real rose as much as 0.5 percent to 1.6640 per dollar earlier. It touched 1.6630 per dollar on Feb. 27, the strongest since May 1999, during a nine-day rally.
Brazil's benchmark Bovespa index declined as much as 2.7 percent, cutting into demand for reais, after state-controlled oil company Petroleo Brasileiro SA reported a drop in earnings yesterday.
The yield on Brazil's zero-coupon bond due in January 2009 was little changed today at 11.78 percent, according to Banco Votorantim SA.