Brazilian Real Continues to Slide Against Dollar; Shares Fall

         

SAO PAULO--The Brazilian real blew past the 3.50 to the dollar level on Thursday as concern about interest rate increases in the U.S. grows, and shares declined.         The Ibovespa stock index fell 0.6% to 50011 points. The real exited active trading at 3.5399 to the dollar, according to Tullett Prebon via FactSet, after closing at 3.4877 on Wednesday. The last time the real traded weaker than 3.50 to the dollar was in 2003.
        The Federal Reserve is preparing to raise its benchmark interest rate, which will make U.S. assets more attractive to investors and pull some money out of Brazil and other economies.
        Any hints by Fed board members about rates rising, and any economic statistics that point to an improving economy, tend to push the real lower. Many analysts expect the Fed to start raising rates as early as next month, though there's little consensus on what the Fed's medium-term strategy will be, said Luiz Carlos Baldan, a director at the Fourtrade brokerage in Sao Paulo.
        "We still don't know if they'll raise the rate and then leave it alone for a while, or raise it and keep raising it," he explained. Brazil's complicated political situation is also hurting the real, he added.
        A growing corruption scandal at state-controlled oil company Petroleo Brasileiro SA, or Petrobras, has sapped confidence in the government of President Dilma Rousseff, and local media report that the threat of her impeachment over accounting measures her finance ministry used to meet fiscal targets appears to be growing.
        In the stock market, companies including highway operator CCR SA and railroad operator Rumo Logistica Operadora Multimodal SA were among the biggest decliners. CCR retreated 5.3% to 13.80 reais and Rumo fell 5.1% to 9.20 reais.
        Petrobras, which will report its earnings later Thursday, was one of the few companies whose shares rose in the Ibovespa, rising 3.1% to 10.32 reais.
        Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
        (END) Dow Jones Newswires
        August 06, 2015 16:42 ET (20:42 GMT)

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