Stocks plummet on a tense day for the market.

247 - On a tense day for the global market, none of the stocks listed on the Bovespa closed higher this Thursday. Following the global trend, the São Paulo stock exchange closed the day down 4,83%, falling to 53.280 points -- the biggest losses were seen in Marfrig (-8,84%), TAM (-8,47%) and Gol (-8,36%).

Major European financial markets plummeted on Thursday amid a worsening external environment, with uncertainty surrounding Greece and growing fears of default, in addition to pessimistic statements from the US Federal Reserve about the global economy. London closed down 4,67%, Frankfurt fell 4,96%, and Paris declined 5,25%.

In New York, the negative signs were repeated, but with less intensity: the Dow Jones lost 3,51%, the Nasdaq fell 2,25%, and the S&P 500 retreated 3,19%.

Credit risk protection contracts in Germany, Italy, and Spain hit a record high on Thursday following weak European economic indicators.

Released this morning, the data accentuated concerns about the state of the global economy following yesterday's announcement by the Federal Reserve (US central bank) that difficulties for growth and financial markets are expected to persist. The eurozone activity indicator, for example, showed a contraction in September, the first since July 2009.

On Wednesday, the Fed took another unconventional step to try to stimulate the U.S. economy, which is flirting with recession, saying it will increase the share of long-term Treasuries in its portfolio by $400 billion by June 2012, in an effort to make credit cheaper and boost spending and investment.

To keep mortgage rates low, the US Federal Reserve also said it will reinvest proceeds from mortgage-backed assets and maturing agency debt into mortgage-backed securities. The practical outcome of these measures, however, is questionable.

In the domestic foreign exchange market, the dollar is up 1,90% and is quoted at R$ 1,88. The currency reached a high of R$ 1,9530, but lost strength after the Central Bank announced the resumption of the offer of traditional currency swap contracts (selling dollars in the futures market), which had not been carried out by the monetary authority since June 26, 2009.

A currency swap is an exchange offered by the Central Bank to investors through the sale of contracts in market auctions. In a traditional currency swap, the Central Bank offers the investor interest payments in exchange for dollar-denominated remuneration.

These contracts were heavily sold during periods of strong appreciation of the Brazilian real. As in swap contracts, each party commits to paying the fluctuation of a rate; therefore, if the interest rate variation is greater than the exchange rate variation during the contract's term, the investor will receive more than they will need to pay.

Earlier, Asian stock markets also closed lower, with declines exceeding 2%. Tokyo's Nikkei index ended down 2,1% at 8.560,26 points. In China, the Shanghai Composite index lost 2,8%, closing at 2.443,06 points.

Read the text published this morning on 247:

247 – The dollar has skyrocketed. Until last week, and since the beginning of the year, virtually all economists and businesspeople, especially those in the export sector, complained about the exchange rate, considering the real to be overvalued in relation to the American currency. There were days when one could buy a dollar for something like R$ 1,55 – the lowest rate in twelve years, recorded on July 22nd, during the Brazilian school holidays. Now, however, all the signs have reversed. Those who complained are now alarmed by the rapid rise of the American currency. “What was supposed to be an ascent by stairs is happening by elevator,” compares a currency specialist. “The problem, when there is an appreciation at the speed we are seeing, is that a fall can happen at the same pace, that is, an environment of volatility is created, which makes decision-making difficult and hinders strategic planning actions of companies.”

Today, while the stock market plummeted by 3,74% due to bad news coming from all directions abroad, the American currency rose by the same proportion, appreciating 3,4% against the Brazilian real. And this was just in the morning! The exchange rate reached R$ 1,94. The previous day, the rise had also been rapid, increasing by 3,4% compared to Tuesday's closing price. It was the largest increase since June 8, 2010.

The uncontrolled surge in this currency is worrying, but there are some positive aspects to the rise of the American dollar, in which the figure of the first president of the United States, George Washington, is dominant. The first, undoubtedly, is the benefit it provides to the export sector. Brazilian commodities and manufactured goods become more competitively priced, with better returns for companies. The domestic market can also benefit, since the rise in the dollar can put a brake on the import frenzy. After all, it becomes more expensive to buy abroad. Currency speculation also tends to decrease. It occurs, for the most part, from foreign investors, who channel resources into the national market in search of the returns offered by the highest interest rates in the world. This movement causes Brazil to be, as economists say, flooded with dollars, which, in practice, leads to depreciation. The change in the exchange rate contributes to a better-adjusted value for the real in relation to other world currencies, which, in theory, alleviates speculative activity.

For the average citizen, who has become accustomed to taking their family on trips abroad during school holidays, the rise in the dollar is, of course, not good news. It means that the world has become more expensive for Brazilians. So far, there are no plans for government measures to curb the rise – and at a time when the whole world fears an economic crisis of serious proportions, it seems that the economic authorities in Brasília are practicing the maxim 'let's leave it as it is and see what happens'.