Key facts
- The real strengthened nearly 2% against the US dollar to around 5.31 per greenback.
- The Bovespa benchmark stock index rose 1% after ending Monday down 13.9%.
- Finance Minister Dario Durigan said the market rout reflected positioning rather than a deterioration in Brazil's economic fundamentals.
Brazilian markets showed signs of recovery on Tuesday, with the real strengthening nearly 2% against the US dollar to around 5.31 and the Bovespa stock index rising 1%, following a sharp selloff the previous day. The decline was triggered by President Luiz Inacio Lula da Silva's reelection. Finance Minister Dario Durigan attributed Monday's market turmoil to investor positioning rather than a weakening of Brazil's economic fundamentals, and pledged the government's commitment to fiscal responsibility. He suggested that calmer trading on Tuesday indicated a more rational market outlook. Investors are now focused on the incoming administration's ability to implement credible fiscal adjustments while maintaining social spending and investment, as well as its choice of economic officials.