In an interview with CNN the chief economist at RPS Capital, Victor Oliveira, assessed that the financial market’s stance this Thursday (10th) is a reflection of investors’ anxiety regarding the lack of definition of president-elect Luiz Inácio Lula da Silva (PT) about fiscal policies and economics of the next government.
“The financial market is losing the benefit of the doubt regarding Lula’s government,” he told Live CNN Brasil.
“There is hope that the president will be fiscally responsible, but there is still no definition: it is not known who will be the Minister of Economy, nor what will come from the Transition PEC, which will have a giant fiscal impact, estimated at around R$ 100 billion. When the market has uncertainty like that, it reacts the way it is reacting now.”
Until 1:10 pm this Thursday, the Ibovespa had fallen sharply, with agents reflecting not only the economic uncertainty of the Lula government, but also the result of the US inflation in October. While the main stock exchange index fell by 2.38%, the dollar advanced 2.89% against the real, trading at R$5.332 on sale.
The American currency rose more than 3% against the real this morning.
According to Oliveira, what generates most instability in the market in terms of the domestic scenario is how large the size of the fiscal impact will be with the Transition PEC and how the fiscal rules will be given from now on.
“We are in a difficult situation, with an uncertain fiscal balance, so the government needs to signal that it will converge. We understand that Auxílio Brasil should be R$ 600, yes, but the problem is how this bill will be paid. For now, what has already been said is negative, in our opinion,” he said, who hopes that the transition team will put the cards on the table as quickly as possible, with clarity and practicality.
“It is important to have this responsibility so that the market can have a more peaceful life, the dollar goes down, interest rates fall, and this also reflects on the lives of the population. Fiscal responsibility and social responsibility are two things that cannot be separated.”
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
