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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The political turmoil faced by Brazil in the past week has led the foreign exchange rate to fluctuate significantly, with the U.S. dollar falling to its lowest rate in relation to the Brazilian real in seven months. The U.S. dollar closed on Friday, March 18th at R$3.582/US$1.

Brazil, Real, currency
Brazil’s currency rises to highest value against the U.S. dollar in nine months, photo by Rafael Neddermeyer/Fotos Publicas.

Both the foreign exchange rate and the São Paulo Stock Market, Bovespa, were extremely volatile last week with the nomination of former President Luiz Inacio Lula da Silva as Rousseff’s Chief of Staff, then the suspension of that nomination by the country’s Supreme Court, in addition to the rallies for and against the government, the PT (Workers’ Party), President Rousseff and ex-leader Lula.

Not even Brazil’s Central Bank decision to reduce by 25 percent the sale of U.S. dollars in the futures market reduced the downward rhythm of the U.S. currency in Brazil. In the first eighteen days of March the U.S. dollar has already lost 10.54 percent, with investors betting on a solution to the country’s political problems in the short-term.

The São Paulo stock market also registered a volatile week, registering gains of almost seven percent, the highest daily hike since 2009, on Thursday March 17th, only to see part of those gains returned on Friday. On the last workday of the week the bourse closed down by 0.19 percent at 50,815 points.

Despite the political turmoil, market perception on Brazil seems to be improving. According to economists the country’s economy is beginning of showing signs that is bottoming out, with a much-depreciated currency, growth retracting at a lower rhythm and inflation slowing down. This economic scenario is starting to become attractive to money managers and investors, according to analysts.

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