Brazil stock market down and dollar rises after resignations in Economy Ministry

RIO DE JANEIRO, BRAZIL – The greenback appreciated 0.60% in the first minutes of the day and broke the ceiling of R$5.70 for buying and selling, in the Brazilian commercial exchange rate. At 1PM local time, the rate was R$5.72, down 1%.

The São Paulo stock market opened down 0.37% after sinking 2.75% the day before, affected by great fiscal uncertainty surrounding the government’s plans to increase social spending in 2022, the year in which President Bolsonaro will seek re-election. At 1 PM the Ibovespa stock index was down 3.4% from yesterday’s close.

The government intends to alter the spending cap to raise sufficient resources to finance a vast social subsidy program at a minimum value of R$400 (US$70) and which would benefit some 17 million families.

Last night, the Chamber of Deputies took the first step to endorse the government’s plans by passing amendments to the spending cap in a special committee as well as deferring the payment of part of the federal government’s court-ordered debts, which will translate into more resources for 2022.

Amid these discussions, four top Ministry of Economy officials resigned on Thursday: the special Secretary of the Treasury and Budget Bruno Funchal, Secretary of the National Treasury Jeferson Bittencourt, and the Deputy Secretaries of both areas Gildenora Dantas and Rafael Araujo.

All four cited “personal reasons.” The Ministry of Mines and Energy’s Secretary of Oil, Gas and Biofuels José Mauro Coelho also resigned the day before, hours after Bolsonaro announced his intention to create another subsidy to help 750,000 truckers with the fuel hike.

Amid this turbulence, the conservative leader argued in favor of his social initiatives and challenged financial market operators. “The market is getting nervous. Well, if you exploit Brazil’s economy, market people, you will also be affected,” the President warned.