Oct 10, 2008, 14:36 GMT
Sao Paulo - Trading was suspended Friday on the Sao Paulo Stock Exchange, after the leading index Bovespa plunged more than 10 per cent about an hour after opening.
The 10.1 per cent drop in share prices recorded at 10:35 am (1335 GMT) activated an automatic circuit breaker, triggered when stocks drop below a certain level and automatically suspending trading for half an hour.
On Friday morning, the Bovespa index - which had neared 74,000 in May - was on 33,308.08.
Trading was halted twice on Monday as the global financial crisis led to steep selloffs. A first circuit breaker is activated when stocks fall by 10 per cent and lasts half an hour. A second, hour- long suspension is put in place if the share price then falls 15 per cent in relation to the previous day's closing.
The mechanism was introduced in Sao Paulo in the late 1990s, and had to be used often to handle successive foreign exchange crises from 1995 to 1999, when the government of President Fernando Henrique Cardoso introduced a huge devaluation of the real and adopted a system of floating exchange rates.
The circuit breaker was triggered last week, for the first time in close to a decade, after the US House of Representatives initially rejected the US government plan to rescue the financial sector. The 700-billion-dollar plan has since been signed into law.
Amid the ongoing global financial crisis, tension is also apparent in the Brazilian currency market, where the dollar was worth 2.30 units of the Brazilian real early Friday, a rise of over 4 per cent in relation to the previous day's closing.
There are currently no comments for this article. Be the first to comment! (no registration required)
There are currently no comments for this article. Be the first to comment! (no registration required)