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Brazilian Real Slides Further - 2002-09-24

Brazil's currency has hit a record low against the U.S. dollar, as financial markets reacted to weekend opinion polls showing a possible first round election victory next month by a leftist presidential candidate. The Brazilian real traded at 3.57 to the U.S. dollar, it's lowest level since July 31.

The value of the Brazilian real began sliding at the start of the day on currency markets and even a central bank intervention did little to stop the plunge. At the close of trading Monday, the Brazilian currency had surpassed its previous record low reached on July 31, when it closed at 3.47 reals to the dollar.

As in July, market nervousness over next month's presidential election appears to the main cause. A weekend poll showed the candidate of the leftist Workers' Party, Luiz Inacio "Lula" da Silva, close to winning a first round victory in the October sixth election. A candidate needs to win an absolute majority on October 6 to avoid a runoff on October 27.

The poll, by the firm Datafolha, showed Mr. Da Silva with 44 percent of the vote, compared to 19 percent for his nearest rival, the government's candidate Jose Serra. Financial markets have shown a preference for Mr. Serra, who is considered more likely to follow the current government's economic stabilization policies.