Brazilian Real Plunges 8% to R$5.41 After Lula Win as Bovespa Sinks 13.9%
Updated
Updated · Financial Times · Oct 26
Brazilian Real Plunges 8% to R$5.41 After Lula Win as Bovespa Sinks 13.9%
3 articles · Updated · Financial Times · Oct 26
Summary
R$5.41 per dollar marked the real’s worst one-day slide since 1999 after Luiz Inácio Lula da Silva’s surprise re-election victory wrongfooted investors who had positioned for a Bolsonaro win.
Lula’s campaign promises of higher welfare, debt relief and free weekend public transport sharpened fears over Brazil’s fiscal path, with the IMF projecting an 8% budget deficit and public debt near 83% of GDP.
São Paulo’s Bovespa dropped 13.9% and briefly triggered a trading halt, while some domestic bond yields jumped above 15% and long-term rate bets surged.
Financial shares led the rout: BTG Pactual fell 25%, Banco do Brasil 29% and Bradesco 22%, while US-listed XP lost 48% and Nubank 17%.
Attention is now shifting to Lula’s finance minister pick and any fiscal signal from an administration that faces a conservative Congress likely to constrain looser spending plans.