U.S. Deputy Treasury Secretary Lawrence Summers canceled a scheduled New York appearance
Wednesday as financial markets reeled from Brazil's effective
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
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
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.