Brazil’s real and stocks dropped on speculation that the president’s proposal to rein in the budget deficit will fail in Congress after lawmakers began formally discussing the possibility of impeachment on the floor of the lower house.
Thursday’s 1.8 percent decline for the currency was the most in emerging markets and sent a gauge of the rout’s momentum, known as the directional movement index, to the highest since March. The currency has plunged 32 percent this year on concern that President Dilma Rousseff won’t be able to shore up the country’s finances amid the worst recession in 25 years and above-target inflation. The benchmark equity gauge, the Ibovespa, fell the most in almost two weeks before erasing some of the losses.
The impeachment discussion among Brazil’s opposition leaders is seen as the most decisive steps so far to try to remove Rousseff from office amid growing discontent over her handling of the economy. Meanwhile, an institute run by former President Luiz Inacio Lula da Silva is working on a new economic plan that would replace the heads of the Finance Ministry and central bank, Valor Economico reported.
The real depreciated to 3.8941 per dollar at 10:50 a.m. in Sao Paulo. The average directional index, a gauge of momentum for the real, increased Thursday to 58. The Ibovespa slipped 0.2 percent to 48,477.73.
Brazil Energy Insight 
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