Brazilian Stocks, Currency Plummet as Presidential Election Looms

Jeffrey T. Lewis and James Ramage – The Wall Street Journal, 09/29/2014

Brazil’s stock market and currency were sent reeling Monday by signs President Dilma Rousseff is pulling ahead of her main challenger in the country’s presidential election next month.

The Brazilian real weakened to its lowest level against the dollar in nearly six years Monday, declining 2.4% to 2.4777 reais, before paring losses to 2.4543 reais later in the day. The country’s benchmark Ibovespa stock index fell as much as 5% in early trading and was down 2.2% early in the afternoon.

Brazil’s losses were among the worst in a broad selloff that hit financial markets across the developing world. Developing economies have been caught up in fears the Federal Reserve is moving closer to raising interest rates, a move that would make higher-yielding currencies, such as those in emerging markets, less attractive to investors. Concerns about protests in Hong Kong have also sent investors into less-risky assets.

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