FORMER CENTRAL BANK CHIEF LOPES INVESTIGATED IN FOREIGN EXCHANGE PROBE, 1999-01-06 (photo)

Former Central Bank chief Francisco Lopes listens to a question during his Senate confirmation hearing on January 6, 1999. A Senate probe is investigating allegations that the Central Bank warned some banks in advance of its decision to allow the local currency to float, enabling them to make big profits. Lopes was in charge at the time of the January 13 devaluation. Lopes did not appear before a Parliamentary Commission of Inquiry (CPI) investigating the possibility of insider trading in foreign exchange markets, saying he was suffering from "psychological pressure" - a reference to a police search of his home in Rio de Janeiro during which stacks of documents were seized. Opposition lawmakers allege the Central Bank favored two local investment banks by selling them dollar futures below market rates on the turbulent day before the devaluation. GN/HB