Brazil economy minister rumors add to jitters

Brazilian President Dilma Rousseff delivers a speech in Brasilia on October 26, 2014 following her win. AFP PHOTO  

In Summary

• Finance Minister Joaquim Levy is the face of leftist President Dilma Rousseff's tilt toward austerity reforms, cutting lavish spending that the debt-saddled government can no longer afford.
• But his job has become a political lightning rod with Brazil now in recession and the government presenting its first deficit budget this week.

Rumors that Brazil's finance minister was about to step down Thursday added to growing jitters in the world's seventh-biggest economy, but the real, which has plummeted this year, held steady.

The currency, down more than 29 per cent in 2015, closed at 3.760 to the dollar, barely changed, despite the political turmoil.

Finance Minister Joaquim Levy is the face of leftist President Dilma Rousseff's tilt toward austerity reforms, cutting lavish spending that the debt-saddled government can no longer afford.

But his job has become a political lightning rod with Brazil now in recession and the government presenting its first deficit budget this week.

On Thursday, Levy cancelled a planned trip of the G20 countries in Turkey and went into a closed-doors meeting with Rousseff, before leaving without comment.

Brazilian media reported that he was believed to be about to step down, but hours later government spokesman Edinho Silva said Levy "is staying because he was always here. He never left."

The confusion briefly sent the real diving before recovering and stabilizing.

"The market was very shaken up by the meeting between Levy and the president," Alex Agostini, an analyst at Austing Rating, said.

"If the meeting reinforced the minister, the market will be calmed because this would mean backing for the austerity measures."

AFP