The dollar jumped more than 8% in a single day after President Luiz Inácio Lula da Silva won reelection, the biggest daily rise of the US currency against the real since January 1999, according to Agência Brasil. In practical terms, a US$ 1,000 expense, such as an international trip or an imported gadget, went from about R$ 4,950 to R$ 5,400 between the weekend and Monday (26). That shock explains the financial market's hurry: investors are pressing Lula to name his next finance minister quickly, but the president is not expected to reveal the pick anytime soon, according to Folha de S.Paulo.
The stock market reacted too. The Ibovespa, the main index of Brazil's B3 exchange, fell 13.88% on Monday, the fifth worst daily drop since 1994, according to a survey cited by Poder360. For someone with R$ 10,000 in a fund that tracks the index, that meant a loss of about R$ 1,390 in a few hours.
For the market, an immediate finance minister announcement would work as a "fiscal credibility shock", a signal that Lula's fourth term will keep spending and debt under control. But aides quoted by Folha say Lula plans to rest after the election marathon and needs to spare his voice, hoarse for about two weeks. His birthday celebration, scheduled for this Tuesday (27), was postponed to the weekend.
One aide described the moment as a "civic hangover": until a few days ago the president was fighting to win the election, and assembling the next government was not the focus.
Understand: what fiscal credibility means
Fiscal credibility is the trust of banks and investors that a government will pay its bills without letting public debt grow too much. When that trust is low, the dollar rises and interest rates stay high, which reaches consumers as more expensive groceries and costlier loans. That is why the choice of finance minister moves markets so much: it is read as a password for where the economy is heading.
Delay has precedents
The wait for the announcement has precedents in Lula's own history, Folha points out. In 2022, elected on October 30, he only confirmed Fernando Haddad as finance minister on December 9, nearly a month and a half after the vote. In 2002, Antonio Palocci was announced on December 10, during a trip to Washington, also more than 40 days after his victory.
The current finance minister, Dario Durigan, tried to calm the mood. According to Poder360, he said Monday's reaction was "positional", because the market had bet on a victory by Flávio Bolsonaro (PL), and announced that the government will send Congress a complementary bill to pursue the center of the fiscal target, the official commitment for the public accounts result.
"The market was betting on an electoral victory by a certain candidate. President Lula, in a historic victory, overturned the market's expectation. And now the market is switching positions," Durigan said.
On Tuesday the market showed signs of settling: the dollar fell 1.07% to R$ 5.349, and the Ibovespa slipped 0.51% to 175,710 points, Agência Brasil reported. The National Treasury had already carried out a buyback of public bonds on Monday to contain the turmoil, and Central Bank president Gabriel Galípolo said the institution can intervene in the exchange market if it spots distortions. Still, Folha notes that the window to announce the economic team is seen as narrow, and the uncertainty over the Finance Ministry keeps weighing on trading.