Brazil In Turmoil, Markets Plummet After Justice Minister's Shock Resignation Over Bolsonaro "Political Interference"

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by Tyler Durden
Friday, Apr 24, 2020 - 02:55 PM

Political chaos has struck the heart of the Jair Bolsonaro administration after the Friday shock resignation of his celebrity justice minister Sérgio Moro, angry over Bolsonaro's sacking the head of Brazil's federal police hours earlier. 

Brazilian markets plunged immediately upon Moro's fiery speech accusing President Jair Bolsonaro of “political interference” — coming also at an extremely sensitive moment in which the far-right populist president faces a torrent of anger over his handling of COVID-19. 

Brazil's Justice Minister Sergio Moro speaks during a news conference in Brasilia, Brazil, via Reuters.

“I was promised carte blanche to appoint all advisers, including judicial bodies,” Moro said hours after the sacking of federal police chief Mauricio Valeixo, who along with Moro became famous in the Car Wash corruption probe. “I can’t go on without ensuring the federal police its autonomy.”

Immediately upon Moro's resignation protests erupted in major cities, even in areas of Rio de Janeiro previously vehemently pro-Bolsonaro, in which people shouted from balconies and through windows: “Fora Bolsonaro! Fora Bolsonaro!” (“Bolsonaro out!”).

The protests began even as his speech was ongoing, and strikes a deep nerve signaling that the very explosive "Trump-style" rhetoric and unpredictable behavior which spurred Bolsonaro's rise as an 'outsider' in the first place is now a major liability amid the COVID-19 crisis.

Markets immediately felt what could be the start of the unraveling of Bolsonaro's administration, per Bloomberg

Markets blew up as investors saw it as further proof that Bolsonaro’s administration is crumbling as it muddles its way through the coronavirus crisis, with speculation growing that Economy Minister Paulo Guedes may soon be out as well. The real sank more than 3% to as low as 5.73 per U.S. dollar. That was by far the worst performance among major currencies on Friday -- and for the year. Stocks tumbled as much as 9.6%.

And the Real entered a nosedive:

“We see a government that’s collapsing in the middle of a pandemic,” a partner at financial adviser FB Wealth in Sao Paulo, Daniela Casabona, told Bloomberg.

Crucially Moro directly accused Bolsonaro, the populist 'anti-corruption president' of essentially seeking to erect of system of far-reaching corruption.

“The president said more than once, expressly, that he wanted a person he could be in touch with personally, whom he could call directly, from whom he could receive information, intelligence reports,” Moro said in his explosive speech, describing that Bolsonaro wanted a new police chief from whom he could receive direct intelligence on issues close to the president.

Moro's charge is further so explosive and threatens to unravel the entire administration given that currently two of Bolsonaro's own sons (and other allies) are under criminal investigation by federal prosecutors and the Supreme Court.

National newspaper reports have leveled the stinging accusation that Bolsonaro is seeking to directly interfere in their cases.