Brazilian assets plunged after the effort to impeach President Dilma Rousseff appeared to hit a roadblock, spurring concern that some of the world’s biggest stock and currency rallies would be undone if the current administration remains in power.
The Ibovespa stock benchmark plummeted 3.1 percent to 50,104.78 at 11:16 a.m. in New York as the real weakened 4.5 percent, the most since September 2011, to 3.6673 per dollar. The interim chief of Brazil’s lower house, Waldir Maranhao, accepted a request from the attorney general to annul the procedure that pushed forward an impeachment motion in the house and called for a new vote.
The Ibovespa and real have posted the biggest rallies among major markets this year on speculation that an impeachment would usher in a new government better able to pull Latin America’s biggest economy out of its worst recession in a century, tame inflation and shore up a fiscal deficit that cost the country its investment-grade credit ratings. The Senate had been scheduled to vote this week on whether to move forward with the impeachment and compel Rousseff to resign for as much as 180 days while she undergoes a trial. The effort had cleared the house in a vote last month.
"Changing the game plan now is crazy,” said Reginaldo Galhardo, a foreign exchange manager at Treviso Corretora de Cambio in Sao Paulo. “If this decision prevails, everyone will have to sit down and build new scenarios. People will have to reconsider everything. It is hard to imagine how."
(BBG)