(Reuters) – In its latest bid to slow dollar inflows in a “global currency war,” Brazil has dealt an unexpected blow to its own commodity exporters, choking off medium-term trade financing at a vulnerable time for the sector.

Brazil – a source of much of the world’s sugar, coffee, soy, beef and iron ore – has imposed a series of taxes on foreign capital over the past year to slow what President Dilma Rousseff called a “tsunami” of cheap money flowing from the rich world.

But exporters say the central bank went a step too far on March 1, when it quietly implemented a 6 percent financial transactions tax on medium-term loans offered to exporters by banks, a critical tool used by major commodity producers across the globe to finance their operations.

That 6 percent tax has shifted demand to one-year credit lines in dollars, known as ACCs, driving up the costs as trading houses and raw materials exporters rush to shift financing needs.

“Of the two types of export credit in Brazil, the government just killed one by taxing it to death and the cost of the other is going up,” said a local executive at a multinational trader who asked not to be named.

Brazil’s largest commodities exporters are now lobbying the government to roll back the so-called IOF tax, which is applied to foreign credit and exchange operations. They say the loss of such dollar-linked loans beyond one year has crimped their access to cash and will eventually limit investments.

“We are going to have to find some solution,” said Luiz Carlos Carvalho, president of Brazil’s Agribusiness Association, which is pressing the government to remove or alter the tax.

Prior to this month, big producers like Bunge (BG.N), Louis Dreyfus, ADM (ADM.N) were free to bring in the dollars when they needed to pay for seed, fertilizer, equipment, fuel or labor. Importers eventually paid off the foreign bank loans through intermediary collection agents after the goods were delivered.

The so-called IOF tax ended this for terms beyond one year.

“Even exporters in minerals and technology had been putting up future foreign delivery contracts to secure financing in dollars with three to five years to pay back,” said Renato Buranello, an attorney in trade finance at Brazilian law firm Demarest & Almeida.

BAD TIMING

The squeeze comes at a delicate time for both exporters and major trade-finance banks like France’s BNP Paribas (BNPP.PA), Credit Lyonnais (CRLPp.PA) and Societe Generale.

In late 2011, European banks, a leading source of financing for raw materials trade across the globe, were paring back loans to assure they would meet capital requirements in the face of increasing writedowns in asset values.

Meanwhile the Brazilian sugar industry, which accounts for half of global trade in the sweetener, is still recovering after the 2008 financial crisis tipped many mills into bankruptcy.

“We used to use this financing — but no more,” said Luiz de Mendonça, chief executive of ETH – one of Brazil’s biggest cane ethanol producers. He said the value of this type of export financing meant $200 million-$300 million for his company alone.

“The loss of it will weaken an already fragile sector and could unleash more consolidation.”

Brazil’s soybean and corn producers are in the worst drought in half of decade. Some will not meet delivery contracts.

Exports in general have been declining here due to weak demand in China, Europe and the United States – and Brazil is struggling with a dwindling trade surplus.

The incoming dollars have strengthened the Brazilian real, punishing local manufacturers by making imports cheaper and Brazilian exports more expensive.

ABUSES

Brazil’s central bank declined to comment on the extension of the IOF tax to export finance. A government source, however, said some companies were not using the credit lines to finance production and exports. Rather, they were using them to make bets in Brazil’s currency and debt markets without paying taxes aimed at slowing speculative dollar inflows.

In recent years foreign investors have flooded Brazil with capital hoping to take advantage of zero-bound interest rates in the U.S., Europe and Japan to bet on Brazilian bonds that paid near low double-digit returns and get the added boost of a strengthening currency. In 2011, the real firmed to its strongest in 11 years, due in part by exports of raw materials.

The strong currency undermined Brazilian manufacturers, though, who had to fight a flood of cheap imports. To help them the central bank laid a tax on speculative dollar inflows.

Some companies seeking to skirt these taxes began using export credit to chase high returns on the financial markets, rather than pay for land, shipping or grow more foodstuffs, said Ademiro Vian, assistant director of financing at the Brazilian Federation of Banks, or Febraban.

“There’s speculation going on. You don’t need five years’ worth of export financing in all ag-export sectors,” Vian said.

SUGAR

But the big trading houses, particularly in the sugar and ethanol industry, are scrambling to shore up new financing.

“I have big exporters as clients that are at a loss over what to do,” said Lucio Feijo Lopes, a local attorney in trade finance. “This marks a big change in how trade finance is structured. There will be an impact on exports.”

Grain producers and exporters say they will manage more easily with the lack of longer-term export financing, as the annual nature of their business allows them to rely more on the 360-day ACC export-exchange contracts for financing.

But this short-term debt is not well suited to longer-term investment needs. Large sugar groups, of which Brazil has plenty, make investments that only pay off in exports over several years.

Long forgotten medium-term export financing contracts that were created in the 1970s under the military dictatorship are being dusted off by the local banks to try to fill the void, but the so-called Export Credit Notes, or NCEs, are based on the real, which exposes the exporter to swings in the currency.

Raw material producers, who are dependent on exports, hold longer-term debt in dollars as a natural hedge against currency risks. If the dollar, which is the currency in which the exports are paid, weakens against the real, so does the firm’s debt.

The government recently exempted exporters from a separate tax on currency futures that hampered hedging against exchange rate risks inherent in the export business.

Exporters said it is a step in the right direction but will not offset the loss of medium-term dollar financing.

“If I hold real-linked debt and the dollar falls to 1-to-1 with the real, then my debt balloons against my revenue stream,” the local executive at a multinational trader said. “Companies don’t last long if they have debts in one currency and revenue in another. As a Brazilian exporter, I have to be in dollars.”

($1=1.83 reais)

FRIDAY, MARCH 30, 2012BY RACHEL METZ

You probably have a lot of friends on Facebook, but chances are there are only a few people—and one in particular—that you interact with most in real life.

A new, free app called Pair wants to make it easier to connect with your special someone, whether it’s a significant other, family member, or friend. And while the app—which allows you to share messages, videos, and “kisses” with one other person—may sound a bit silly, it shows there’s still plenty of room for innovating in the increasingly crowded field for social mobile apps.

Stats indicate Pair may be on to something, too: In the first four days since it was released last Friday, it snagged more than 50,000 registered users, who sent over a million messages to each other. And while Pair was eligible for $150,000 in guaranteed funding since it participated in startup incubator Y Combinator’s just-completed winter session, it has also received funding from Dave Morin, CEO of another social mobile app, Path.

Pair began as something else entirely. Aswin Rajendiran, 27, says he and his four cofounders were initially working on software called Maide that could control 3-D CAD tools via the iPad. The founders, all of whom have graduated from or still attend Canada’s University of Waterloo, moved to Mountain View, California, several months ago to develop Maide at Y Combinator. But while they received good feedback for their project, “it wasn’t an everyday-use kind of thing,” Rajendiran says.

Recognizing that we tend to communicate mostly with just one or two people, and that many of us use a number of methods to communicate with these folks, Rajendiran and his collaborators came up with Pair to simplify and amplify one-on-one connections.

Once you download Pair onto your iPhone (Rajendiran says an Android app will be available in about a week), you invite one other person to use the app with you. After they accept, Pair allows you to send each other messages, videos, photos, simple sketches, and more. There are several interactive features, too, including one called Thumbkiss, which shows a fingerprint when you press on the screen and makes both phones vibrate when you and your partner touch the same part of the display. To keep Pair communication private, the app can be locked with a four-digit code.

For Craig Elimeliah, the digital director at advertising agency RAPP in New York, Pair is like having a private version of Facebook or Twitter. He says he initially tried it because staying on top of new tech is part of his job, but quickly realized the app works well for sharing messages and links with his wife that their children won’t see when playing around with their parents’ phones.

“It’s kind of romantic,” he says. “There’s something about it where it’s just paired between her and I and there is nothing else on the screen. It keeps conversations focused.”

Rajendiran says that, for now, the focus is on improving the quality of interactions between users, rather than on making money. But the startup might eventually sell premium features, he says.

Catalina Toma, an assistant professor at the University of Wisconsin-Madison who studies the impact of technology on relationships, says Pair helps people let their partners know they’re important, which is key to keeping a close, happy connection.

“I think close couples do this kind of behavior anyway—they do texting, send photos—and this app just brings them together in one platform and recognizes the importance of this behavior,” she says.

And Pair isn’t just bringing together significant others. James Tamplin, a Y Combinator alum and CEO of online chat software provider Envolve, has been playing around with the app with his cofounder and says he could see it becoming a tool even for those in nonromantic relationships.

“It’s got the hook, which is the relationship part, but ultimately it’s a rich messaging application,” he says. “I think they can use that technology to expand it beyond couples and have it be useful and productive.”

Choosing the right type of mentor is important as a way to speed up your learning and help compete for jobs that were previously held by those with decades of experience, says Harvard Business Review.

The Management Tip of the Day offers quick, practical management tips and ideas from Harvard Business Review and HBR.org (http:\\www.hbr.org). Any opinions expressed are not endorsed by Reuters.

“Many of the jobs that Baby Boomers will vacate over the next two decades will go to young upstarts. But how do you compete for jobs formerly held by people with decades more experience?

The right mentors can help speed up your learning. Consider contacting the following types of people:

1. A senior executive with experience in a country where your company is expanding—perhaps in an emerging market, such as Brazil or Russia. Develop a more global mind-set.

2. A high-performing peer in an adjacent industry. Gain a new, broader perspective on the field in which your company operates.

3. A mid-level manager in a sector your business serves. Get into your customer’s shoes and see how the industry looks from another standpoint.”

Today’s management tip was adapted from the book, “Guide to Getting the Mentoring You Need.”

Thu Mar 29, 2012

Research In Motion on Thursday reported a quarterly loss as BlackBerry shipments slumped again and said former co-CEO Jim Balsillie stepped down as director, part of a shake-up of the company’s senior ranks by its new chief executive.

RIM’s shares dropped as much as 9 percent after the company said it would no longer issue financial forecasts and is reviewing “strategic opportunities” such as partnerships and joint ventures licensing, and other ways to leverage its assets.

Chief Executive Thorsten Heins, who took from Balsillie and co-CEO Mike Lazaridis in January, would not rule out a sale of the company, though he said the company was still focusing on a turnaround.

“I did my own reality check on where the entire company really is. Having had the benefit of going through this process from the vantage point of CEO, it is now very clear to me that substantial change is what RIM needs,” he said in a conference call with analysts.

The Waterloo, Ontario-based company shipped 11.1 million BlackBerry smartphones in the fourth quarter ended March 3, down 21 percent from the third quarter, but slightly ahead of analysts’ expectations.

Even so it was the first quarterly decline in the period covering Christmas since 2006 and only the second time RIM has reported the metric dropping for that crucial period.

RIM sold more than 500,000 PlayBooks in the fourth quarter, a number inflated by deep discounts offered to boost sales of the product.

The decline in BlackBerry shipments suggests that RIM, at best, is treading water until it releases its next-generation of BlackBerry smartphones late this year. Most analysts consider that a do-or-die launch for the company as it falls further behind Apple Inc’s iPhone and iPad and devices powered by Google’s Android.

“PAYING THE PRICE”

The company is now paying the price for failing to heed calls to move quickly to license its operating system and consider other strategies to compete with industry titan Apple, said Peter Misek, managing director of Jefferies & Co.

“It’s going to be absolute gong show for the next few quarters,” he said. “They’re going to scramble around now for the next three to six months, and every poor shareholder that had faith in them is going to be potentially impoverished. I’m so angry as a Canadian – every Canadian investor should be angry.”

After Heins took over in January, he immediately raised investor doubts about his turnaround chops by declaring RIM didn’t need drastic change, a stance he later clarified as meaning RIM was not going to be split up or sold.

But the results issued Thursday showed a major shakeup in the works at the Waterloo, Ontario-based company.

RIM said Balsillie – long one of the company’s public faces – had resigned from the board. David Yach, a chief technology officer, and Jim Rowan, a chief operating officer, also stepped down.

“Ultimately, RIM is taking half measures, baby-stepping their way to a reorganization and they’re not moving fast enough,” said Ed Snyder, an analyst with Charter Equity Research. “They need a wholesale change in the culture and the management of the company.”

RIM has also decided to end the practice of providing specific financial guidance for the current and future quarters, saying only it “expects continued pressure on revenue and earningsthroughout fiscal 2013.”

That expectation reflects weakness in the company’s U.S. business and competitive pressure in global markets as it sells more low-end devices.

RIM historically has provided a forecast for BlackBerry shipments, earnings per share and revenue, but has faced scathing criticism in the past year for missing these targets.

BY THE NUMBERS

In its fourth-quarter, the company announced a net loss of $125 million, or 24 cents a share, after booking write-downs on its legacy BlackBerry 7 phones and goodwill.

On an adjusted basis, profit dropped to $418 million, or 80 cents a share, from $934 million, or $1.78, a year earlier. Revenue slumped to $4.19 billion from $5.56 billion.

Analysts, on average, had expected RIM to earn 81 cents a share on revenue of $4.54 million, according to Thomson Reuters I/B/E/S.

“They clearly have no fix on when this process will bottom, and until it really does, it’s going to be very difficult for a lot of investors to come back in,” said Eric Jackson, a hedge fund manager at Ironfire Capital in New York.

Shares of RIM were trading down 2.4 percent at $13.40 after the bell. Soon after the company released its results, the stock fell as much as 9 percent. The shares have fallen as much as 80 percent since February 2011.

By Alastair Sharp

TORONTO | Thu Mar 29, 2012 6:55pm EDT

(Bloomberg) — U.S. stocks advanced, sending the Standard & Poor’s 500 Index near the highest level in about three years, as the cost of insuring European debt declined the most in two weeks on optimism Greece will get a bailout.

Applied Materials Inc., the largest producer of chipmaking equipment, rose 2 percent after predicting higher profit than estimated. H.J. Heinz Co., the world’s biggest ketchup maker, and Campbell Soup Co., the largest soup maker, added at least 3.7 percent as earnings beat projections. Gilead Sciences Inc., which bought Pharmasset Inc. for $10.8 billion last year to gain an experimental hepatitis C drug, plunged 14 percent as some patients on that medicine relapsed after stopping therapy.

The S&P 500 rose 0.2 percent to 1,360.27 at 10:07 a.m. New York time. It’s near its peak nine months ago of 1,363.61, which was the highest level since June 2008. The Dow Jones Industrial Average added 24.90 points, or 0.2 percent, to 12,928.98. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments slid 11 basis points to 337.

“Greece is the word,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “We’re just reacting to what the euro zone is telling us in terms of the state of negotiations. Do I believe that the euro zone will give Greece more money? Yes. Otherwise, Greece defaults.”

U.S. stocks joined a global rally. German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos discussed efforts to secure a second bailout for Greece and are confident that euro-area finance ministers will “find a solution for open questions” on Feb. 20, Steffen Seibert, Merkel’s chief spokesman, said in a statement.

Biggest Gains

Seven out of 10 groups in the S&P 500 advanced as consumer discretionary, industrial and telephone shares had the biggest gains. The Morgan Stanley Cyclical Index of companies most-tied to the economy added 0.6 percent. The KBW Bank Index of 24 stocks added 0.4 percent as JPMorgan Chase & Co. climbed 1.4 percent to $38.53.

Applied Materials rallied 2 percent to $13.48. Customers are stepping up equipment spending to ensure they can meet demand for chips used in smartphones, tablets and other mobile devices. Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. are helping fuel the rebound, according to Patrick Ho, an analyst at Stifel Nicolaus & Co.

H.J. Heinz gained 3.9 percent to $54.13. The company reported third-quarter earnings excluding some items of 95 cents a share, beating the average analyst estimate of 85 cents.

Campbell Soup

Campbell Soup added 3.7 percent to $33.25. The company reported second-quarter earnings excluding some items of 64 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 62 cents.

First Solar Inc. rose 12 percent to $44.62. The biggest maker of thin-film solar panels resolved a permitting issue with Los Angeles County for a $1.36 billion power project under construction, paving the way for financing to resume.

Gilead tumbled 14 percent to $47.30. Among eight patients with hepatitis C genotype 1 in a clinical trial, six had a viral relapse within four weeks after stopping a 12-week treatment with the medicine, GS-7977, plus ribavirin, Gilead said today in a statement. The two other patients are two weeks out from stopping treatment, and haven’t relapsed, the company said.

General Mills Inc. dropped 3.3 percent to $38.45. The maker of Cheerios cereal and Yoplait yogurt reduced its earnings forecast for this year, citing “weak” demand in the U.S.

Most Hated

The companies investors hated the most in 2011 have returned twice as much as the S&P 500 this year, burning speculators who bet stocks from Sears Holdings Corp. to Netflix Inc. would keep falling.

The 26 companies in the S&P 500 with the highest so-called short interest relative to shares available for trading rallied 18 percent this year, compared with 8 percent for the full index, data compiled by Bloomberg show. Speculators who borrowed Sears shares and sold them to profit from a drop got hammered as the stock surged 73 percent. Netflix, with short interest of 17 percent at the end of 2011, rose 76 percent.

Banks, commodity and industrial companies, the only groups to post losses last year, are leading stocks higher on signs the U.S. economy is gaining momentum. That’s forcing speculators to cut bearish wagers after pushing them to the highest levels since the market bottomed in 2009, according to a survey by International Strategy & Investment Group.

“It’s been a rotation back into fundamentally sound, economically sensitive companies that had been unduly punished in the second half of last year,” David Spika, who helps oversee $13 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas, said in a telephone interview. “When the market turns, those shorts have to be covered and that creates momentum.”

–With assistance from, Lu Wang in New York. Editor: Jeff Sutherland