Brazil Currency Drops As President Agrees To Replace Embattled Finance Minister

Just a day after Dilma Rousseff agreed to approve a 2016 budget bill that preserves the primary surplus target unchanged at BRL43.8b, a win for Joaquim Levy who was against including BRL20b in rebates w/ the PAC program, local newspaper Valor Economico reports that Rousseff has agreed to remove the embattled FinMin. 

From Bloomberg:

  • Brazil Finance Minister Joaquim Levy’s departure is certain, local newspaper Valor Economico reports citing sources it didn’t name.
  • President Dilma Rousseff has not yet decided on replacement, Valor reports 
  • Former central bank President Henrique Meirelles is strongest candidate
  • If Meirelles gets position, he will not have complete freedom on economic policy, Valor reports

And the reaction in the BRL:

Here's a bit more from Bloomberg out earlier today:

  • Rousseff sided w/ Levy and authorized representatives on the joint budget committee to reinforce the 2016 goal: Folha
    • Levy has said privately that the market can accept the shortfall this year if govt ensures robust and reliable surplus for 2016: Folha
    • People close to Levy said that if he was defeated in discussion, he could’ve taken that as opportunity to leave govt, newspaper says
    • Presidential aides said Levy has not presented his resignation, but admit that he has complained to friends and shows he’s tired of constant attacks, according to Folha
  • Lula was in Brasilia yday talking to politicians to argue for the govt to replace Levy w/ former BCB Governor Henrique Meirelles: Folha
    • Lula thinks impeachment talks could resurface if govt doesn’t change economic policy, according to Folha and Valor
  • No one in Rousseff’s inner circle believes she will make a quick decision on FinMin: Folha

And just hours later, we get the denial:

  • ROUSSEFF SAID NOT TO HAVE INTENTION TO REMOVE LEVY FROM POST
  • ROUSSEFF SAID NOT TO BE CONSIDERING MEIRELLES TO REPLACE LEVY

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