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Summers Cancels Trip, Cites Market Situation
WASHINGTON — U.S. Deputy Treasury Secretary Lawrence Summers canceled a scheduled New York appearance Wednesday as financial markets reeled from Brazil's effective currency devaluation.

A Treasury spokeswoman said that "developments in financial markets" had led to Summers' decision to remain in Washington instead of speaking to a New York insurance industry forum. No further details were given and Treasury did not say what Summers would be doing.

At times of financial crisis, deputy finance ministers usually hold numerous conference calls. In Bonn, the German Finance Ministry said the Group of Seven industrialized nations was discussing Brazil but had not yet drafted its own response. Currency markets worldwide were in turmoil after Brazil's central bank chief said he would quit and the central bank effectively devalued the currency.

U.S. bond prices soared by more than two full points as investors seeking safer haven poured money into U.S. capital markets and shunned emerging economies. But stock prices on the New York stock exchange plummeted on fears about the future of Brazil's economy, the largest in Latin America.

Brazilian officials said the real could see a 12 percent devaluation against the U.S. dollar this year. Brazil's crisis intensified last week when the governor of a major state announced a 90-day moratorium on debt payments.

Brazilian officials said Wednesday the country has substantial foreign reserves of nearly $45 billion to defend its currency.

Last November, in return for a $41.5-billion credit package from the International Monetary Fund, Brazil agreed to follow an austerity budget that set strict limits for the budget deficit. Brazilian officials said Wednesday that the targets remained in force.

Treasury issued a copy of Summers' prepared remarks to the New York insurance group, in which he said the global economy had experienced "a difficult few months" but said a U.S. expansion remained on track.

Summers made no mention of Brazil in the text.

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