Crisis-hit Brazil suffers New Year finance jitters

Brazil suffered a rough start to 2016 on Monday with its currency weakening further and stock prices falling as worldwide turbulence originating in China hit the world's seventh-biggest economy.

The exchange rate broke through the symbolic barrier of four reals to the dollar, a sign of pressure on a currency that had already lost nearly a third of its value in 2015.

The real weakened by 1.96 percent to 4.029 reals per dollar. The rate had stood at 3.95 reals at the last close of trade on December 30.

The Sao Paulo stock exchange also fell Monday, with its key Ibovespa index down by 2.69 percent at 42,183 points in late afternoon trading. It had fallen by 13 percent overall in 2015.

The weakening real appeared to have helped ease the decline in the country's exports, however, as Brazil reversed its trade deficit of 2014.

In a rare bit of positive news, the government on Monday said Brazil posted a trade surplus of $19.7 billion for last year, its biggest since 2011.

China was the biggest buyer of Brazilian goods in 2015, followed by the United States and Argentina, the government said.

In China on Monday, trading on the stock markets was halted early as the benchmark Shanghai Composite Index dropped nearly seven percent following poor manufacturing data.

That led to a grim opening for 2016 worldwide, with markets from Tokyo to Frankfurt to Wall Street sharply down.

Brazil, which hosts the summer Olympic Games in August, is struggling through a deep recession and a political crisis that has sparked impeachment proceedings against President Dilma Rousseff.

The government expects the economy to contract 3.1 percent this year and 1.9 percent next year. But in a fresh blow on Monday, experts polled by the Brazilian Central Bank lowered their own growth outlook to minus 3.71 percent.