If Brazil’s President Dilma Rousseff had wanted to know the cost of suddenly losing her respected finance minister Joaquim Levy, she received the answer last Friday.
Rumours spread just as traders were going home for the weekend that Mr Levy was quitting. Between the start of the rumour and the government’s official denial one or two hours later, the real depreciated about 3 per cent against the dollar to R$3.92.
The episode highlighted the new investment reality in Brazil — that Latin America’s largest capital market has become driven by political risk. Before the latest rumours concerning Mr Levy, the market was being buffeted by speculation over whether Ms Rousseff of the left-leaning Workers’ Party, known as PT, would be impeached.