Analysis on “The negative reaction of the market to the slowdown in the privatization of state-owned enterprises and the strengthening of the Welfare”
On the 2nd (local time), the first day that the 3rd term government of President Luis Inacio Lula Dashuva (77) started working in earnest, the value of the Brazilian currency and the stock market collapsed in parallel.
According to Reuters, the value of the real fell 1.5% against the dollar on the day.
The exchange rate of the real against the dollar closed at 5.36 reals, up 0.07 reals from the previous trading day (5.29 reals).
This is the lowest level since November 28 last year (5.37 reals).
The Bovespa index of the São Paulo stock exchange closed at 106,376.02, down 3.06%.
Notably, shares of Petrobras, the state-owned oil company, fell 6.45%.
It analyzes that the market reacted negatively from day one to the Lula government’s economic policy of strengthening social assistance programs to solve hunger and poverty, slowing down the privatization policy of state-owned enterprises of the former government of Jair Bolsonaro.
President Lula actually signed off on an extension of the fuel tax exemption as one of the first programs of his inauguration, which is expected to lead to sluggish tax revenues of 52.9 billion reals (about 12.7 trillion won) to year.
Finance Minister Fernando Adazi tried to allay market concerns, saying: ‘We are not here to take risks, so we will control our spending appropriately to reduce the tax burden,’ Reuters reported, but did not appear to have persuaded them enough. .
Meanwhile, President Lula posted on his Twitter account the same day, revealing that he had received a letter from Vice President Wang Qishan from President Xi Jinping expressing his intention to promote cooperation with Brazil.
/yunhap news
