Brazil's Stock Market Falls 12% in Biggest Drop of the Century

Oil price intensifies global crisis, and Paulo Guedes defends reforms, but Congress calls for more immediate actions

On a day rocked by panic in the stock markets around the world, the Brazilian stock market collapsed 12.17%, at 86,067 points, its lowest level since December 26, 2018. It is the biggest drop in one day, in percentage, since the Russian crisis in September 1998.                                                         

São Paulo interrupted negotiations when the devaluation hit 10%. New York also had a circuit breaker. The dollar soared and, despite two BC interventions, closed up 2%. The country risk rose by 30.3%.

Brazil's Economy Minister Paulo Guedes looks on during a ceremony at the Planalto Palace in Brasilia, Brazil March 4, 2020. REUTERS/Adriano Machado - REUTERS

After the coronavirus crisis in January, the Ibovespa fell 27.35% and erased the gain obtained since the beginning of the Bolsonaro government. Yesterday, the devaluation of oil weighed amid the dispute between Saudis and Russians.

Economy Minister Paulo Guedes declared that "Brazilian democracy will react by transforming this crisis into advancing reforms." "[It is time for] the three Powers, with serenity, each to resolve his part."

"We are ready to help, like last year. I think the [reforms] help, but they are certainly not the only point to solve the damage of the crisis", said Rodrigo Maia (DEM-RJ), president of the Chamber.

Congress has signaled that it will stop the Emergency PEC, which creates triggers to contain public spending. "The PEC we need is not this one," said Senator Simone Tebet (MDB-MS), rapporteur of the proposal.

Translated by Kiratiana Freelon

Read the article in the original language