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Thursday 09th of July 2009
August 18, 2005

Brazil markets disappointed as politics scandal grows


by Brian Turner
Brazil markets disappointed as politics scandal grows

In Brazil on Thursday, the real weakened and the stock market lost almost 1 percent on new allegations growing out of the current political scandal and on frustration that an interest rate cut expected by some investors did not materialize.

The Bovespa index in Sao Paulo lost 0.95 percent to 27,156.

Some analysts called the decline a “correction” after the disappointment that rates were not cut, and said that they do not expect the decline to last. The index had risen over 1 percent on Wednesday in anticipation of the hoped-for cut.

Meanwhile the real was down 0.64 percent to 2.369 on the dollar as investors paid close attention to the testimony before parliament of the former treasurer of the Workers’ Party, Delubio Soares, who was accused by another congressman of paying off legislators in return for their votes.

Soares has denied the bribery accusations but has admitted to using off-books funds to pay for the party’s campaign expenses. He would not, however, directly answer some of the questions put to him during his testimony.

His testimony is being closely watched to see if he will make a direct connection between his admission of using illegal funds to pay for campaigns and the 2002 presidential campaign of President Luiz Inacio Lula da Silva.

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