By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – Brazil’s stock market (Bovespa) tumbled on Monday, as the financial market reacted negatively to the re-election of incumbent president Dilma Rousseff on Sunday, falling by as much as 6.18 percent during the morning trading hours and closing down by 2.77 percent, at 50,503 points.
“The election led to some volatility in the markets,” said Brazil’s Finance Minister Guido Mantega during a press conference on Monday, “This, however, is also due to external factors. We are seeing all stock markets fall today.” According to Mantega, the fact that Dilma Rousseff won another four years in the Presidential Palace showed that the administration’s economic policies had been approved by the population.
Shares from state-owned controlled oil giant Petrobras, company at the center of a money-laundering scheme, fell by more than twelve percent during the day. Eletrobras, state-controlled energy company, fell by almost twelve percent and shares of Banco do Brasil retreated by five percent by the end of Monday’s session.
As the Bovespa tumbled the foreign exchange rate Brazilian real/U.S. dollar surged, with the U.S. currency appreciating by 2.68 percent in a single day and the foreign exchange rate going to R$2.5229/US$1.
According to analysts the fact that the Rousseff administration has not yet named a replacement for Guido Mantega, who has already announced he is leaving the position as of January 2015, has created much speculation and left financial markets very volatile. Monday night, on national TV, Dilma Rousseff said that changes in the economy, as well as the name of the person to lead her financial team, would be announced by the end of the year.