Following recent strength on the heels of hope for a new finance minister, news that Ruosseff has sent the minimum-wage-hike Bill to Congress appears to have crushed the hype of any fiscal rectitude and sent Real tumbling. Down over 4% - the most since September 2011 - BRL is back above 4.00 per USD, giving up all the recent gains.
Broad weakness in EMFX...
[3]
Seems to have been exacerbated by:
- *BRAZIL ROUSSEFF SENDS BILLS ON CIVIL SERVANT WAGES TO CONGRESS
A Bill that could cost BRL 4.77 billion, wrecking hopes of any improvment in the fiscal situation. As Bloomberg reports,
Brazil’s bigger-than-estimated minimum wage increase and potential credit expansion make it harder for govt to control around 11% on year inflation and cut budget gap, Marcelo Schmitt, portfolio manager at investment firm Sul America, says in a phone interview.
These initial policy steps after Barbosa replacing Levy as finance minister are concerning, says Schmitt.
And so...
[4]
This is the biggest drop in BRL since September 2011.
Charts: Bloomberg
