November 18, 2022

Emerging Markets-Brazil’s Real, Stocks Slide after Budget Proposal; Other EM Currencies Weak

Featuring Rachel Ziemba

Source: Reuters

Journalist Devik Jain

After sliding as much as 2.3% against the dollar, the real was last down 0.2%, while the Bovespa stock index dropped 1.5% after the incoming Lula administration proposed guidelines for a constitutional amendment to exempt some 175 billion reais ($32.41 billion) from next year's budget to pay for social programs.

Market (participants) are worried that the Lula government will engage in various activities to breach the spending cap, which would lead to more fiscal expansion, potentially more inflation and mean that the Banco Central do Brasil would come under additional hiking pressure," said Rachel Ziemba, founder of Ziemba Insights.

Read the full story and more from Reuters.

Authors

  • Rachel Ziemba

    Adjunct Senior Fellow, Energy, Economics, & Security Program

    Rachel Ziemba is an Adjunct Senior Fellow at the Center for a New American Security (CNAS). Her research focuses on the interlinkages between economics, finance and security i...