Brazil’s real posted its biggest decline in four months, extending its fifth annual drop, as oil prices tumbled and an increase in the minimum wage fueled concern that the country’s fiscal situation will worsen.
The currency fell 3.7 percent to 4.0104 per dollar as of 2:03 p.m. in Sao Paulo. The real is the worst performer among 16 major currencies in 2015, with a 34 percent decline. One-month implied volatility rose to 23.7 percent, the highest among the group.
The drop in oil prices weakens Brazil’s terms of trade as the country wrestles with a deepening recession and the government struggles to balance the budget amid political turmoil including efforts to impeach the president. The 1.5 percent increase in the minimum wage next year will cost the government an additional 4.77 billion reais in 2016, the Planning Ministry said Wednesday, hampering efforts to shore up fiscal accounts after Brazil lost its investment-grade rating from two rating companies this year.
Brazil Energy Insight 
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