For the first time since 2002, the presidential dispute again has determined the course of the financial market. But, if at that time the dollar reflected the expectations regarding the country’s command, this year, it’s the stock market that plays the part.

Since polls began to show the decline of President Dilma Rousseff (PT) in March, the national stock market, which had been declining and deepening the fall started in the previous year (15.5%), changed direction.

In the week that the first major survey showing the president’s decline was published – on March 20 by Ibope – Ibovespa, the stock market’s main index, rose 5.4%.

It became positive again on April 2, and now is up 3.1%. By the week before the survey was disclosed, the index showed a 12.7% decline in 2014.

Petrobras is the main cause for the turnaround: its preferential shares fell 18.09% until March 20, and now are up 3.45% on the year.

The shares of Banco do Brasil and Eletrobras also have risen since March 20 – before that, they had fallen 14.34% and 0.40% in 2014.

Analysts say investors believe there may be a reduction in the use of public companies as a political instrument if another party takes office after the October elections.

“They could create more favorable conditions for those companies, such as proposals of privatization,” says André Perfeito, chief economist at Gradual Investimentos.

Carlos Melo, a political scientist at education institute Insper, says “there are doubts whether Rousseff will be able to promote deeper adjustments in public finances.”

The dollar has been declining – by last Friday the fall amounted to 5.97% this year -, as more resources have entered the country attracted by the high interest rates and the possibility of a change in the country’s command.

However, although the surveys show Rousseff’s decline, they also show that she would win the election against any of the other pre-candidates.

The Brazilian Central Bank’s daily interventions in the dollar exchange rate started in August 2013 and help to maintain the currency under control. And Brazil has international reserves of some US$ 379 billion.


In 2002, there was a different concern: that the PT administration would break contracts and make businessmen lose money.

The title of the government program of then-candidate Luiz Inácio Lula da Silva, “The Necessary Rupture,” reinforced the idea.

“The market panicked,” says Simão Silber, a professor at FEA-USP. Not even the publishing of the “Letter to the Brazilian People,” – a document disclosed in June 2002 in which Lula agreed to commit to changes without sharp ruptures, – could change that perception.

As a consequence, the dollar skyrocketed to R$ 4 in mid October, with a 70% appreciation since the beginning of that year.

The stock market, which had little relevance in the country, fell 26.7% in the same period.