Date
21 August 2017
Dilma Rousseff addresses a news conference in Brasilia after her election victory. The Brazilian leader now faces the daunting task of reviving economic growth. Photo: Reuters
Dilma Rousseff addresses a news conference in Brasilia after her election victory. The Brazilian leader now faces the daunting task of reviving economic growth. Photo: Reuters

Brazil markets dive after Rousseff’s narrow re-election victory

Brazil’s financial markets tumbled on Monday following President Dilma Rousseff’s narrow re-election victory, with investors skeptical whether she can restore confidence in the economy.

The benchmark Bovespa stock index fell 5 percent in early trading before ending the day 2.72 percent lower, Reuters reported.

Oil giant Petrobras led a selloff in major state-run companies whose profits have suffered under Rousseff. Petrobras plunged more than 12 percent, its biggest one-day slide in nearly six years.

Meanwhile, the nation’s currency, the real, closed at 2.52 per US dollar, its weakest level since April 2005.

Rousseff overcame dissatisfaction with a sluggish economy and poor public services to win a second term on Sunday by a narrow margin, dashing the hopes of investors and nearly half the electorate who bet on her pro-business challenger.

She now faces the challenge of delivering on campaign promises to expand social benefits for the poor while balancing a strained federal budget, Reuters noted.

Fitch Ratings said on Monday that it continues to evaluate Rousseff’s ability to revive growth and pursue less interventionist policies.

Rousseff “will face a challenging economic environment, highlighting the need for policy adjustments to address some of the macroeconomic imbalances that have emerged,” the ratings agency said.

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RC

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