R$ 5.45. That is where the Brazilian real ended up against the dollar on Monday (26), one day after Lula won a fourth term, in a session so rough that the Sao Paulo stock exchange triggered its circuit breaker, a mechanism that halts trading when losses get too steep. A pricier dollar shows up at the gas pump and on supermarket shelves, and the market jitters make credit more expensive for workers who rely on installment plans and credit cards.
It is against this backdrop that Lula is picking who will run the economy in his fourth term. According to Folha de S.Paulo, the president told allies he wants the reelected governor of Piaui, Rafael Fonteles, on his team, and the most likely post is the Finance Ministry, Brazil's most powerful cabinet job. Lula's aides say the governor combines technical preparation with electoral weight.
Fonteles has already told people close to the president that he would accept resigning as governor, despite the strong vote he won in his state's election. Allies of the governor say he would take the job if Lula offered it to him as a mission. No decision has been made so far.
Why this matters
The finance minister runs the government's cash box: how much it spends, how much it collects and how much interest it pays on the public debt. When financial markets distrust the books, they charge higher interest to lend to the country, and that cost reaches consumers through pricier loans and credit cards. That is why investors watch the pick so closely.
The other names in the running
If the Fonteles option falls through, reelected Vice President Geraldo Alckmin is the name being mentioned for the job, Folha reports, and even a market-backed pick has not been ruled out. Correio Braziliense found that Alckmin could take over the Finance Ministry precisely to calm markets and signal a commitment to fiscal responsibility, meaning tighter control of public spending.
Fonteles was already positioning himself for a prominent role in a possible fourth Lula government during the campaign. He swapped his running mate, picked former Education secretary Washington Bandeira, a trusted ally, and overrode local PT leaders to make it happen. Having a friendly vice governor would ease his exit from the state government without a political crisis back home.