Brazil’s real declined amid speculation that tensions between Finance Minister Joaquim Levy and Planning Minister Nelson Barbosa over fiscal policy is heating up again, adding another hurdle to passing reforms needed to shore up the budget and resume growth.
A Valor Economico newspaper columnist reported Friday that Levy is defending a so-called primary budget surplus target of 0.7 percent of gross domestic product next year to restore credibility and avoid further credit-rating downgrades. Barbosa wants to lower the target to between zero and 0.7 percent. The dispute comes as Congress is already locked in a political stalemate amid efforts to impeach President Dilma Rousseff and as the lower-house leader faces allegations of corruption.
The real slid 0.8 percent to 3.8427 per dollar as of 9:47 a.m. in Sao Paulo. The currency also sank as Valor and Estado de S. Paulo newspaper reported late Thursday that Levy is threatening to leave his post if his target isn’t approved. One-month implied volatility rose to 26.21 percent, the highest since Oct. 16.
Brazil Energy Insight 
Leave a comment