We’re covering the aftermath of markets’ hectic Monday. The effects of the oil crisis on Brazil. And an update of novel coronavirus infections in the country.
How can Brazil respond to the imminent crisis?
Brazilian markets have faced turmoil since returning from the Carnival holidays, culminating with yesterday’s crash—the single worst trading day in nearly 22 years. Following an oil price war kicked off by Saudi Arabia and Russia over the weekend, Brazil’s benchmark stocks index dropped 12.17 percent, triggering a circuit breaker, which stopped trading for 30 minutes. Meanwhile, the U.S. Dollar reached BRL 4.7246—the highest nominal foreign exchange rate ever. And Petrobras lost 30 percent in market value in what was the biggest one-day slide in company history.
Context. Russia decided not to follow the Organization of the Petroleum Exporting Countries (Opec) in slashing oil production to artificially inflate prices—driven down by a coronavirus-related curtailed demand. In retaliation, Saudi Arabia decided to flood the markets with cheap oil, leading to the biggest price fall since the Gulf War.
Why it matters. There is no indication economic conditions have reached rock-bottom.
No agreement. Brazilian leadership is doubling down on its strategy to restrict public investment and gamble on approving...