Brazil’s real, stocks and bonds sank as a fresh political crisis ensnared President Michel Temer and threatened to derail a reform agenda that had helped restore confidence in the embattled South American nation. The Ibovespa slid 10 percent before trading was halted, and futures on the real dropped 6 percent -- also triggering a circuit breaker. Oil producer Petroleo Brasileiro SA and lender Banco do Brasil SA plunged at least 18 percent.
Brazil’s currency fell for the first time in seven days and by the most in almost a month overnight before reports President Michel Temer was involved in an alleged cover-up with the jailed former speaker of the lower house of Congress. The news recalls the chaos of the past year that culminated in the impeachment of Temer’s predecessor Dilma Rousseff.
Brazilian assets including the real are showing signs of joining a global risk-off trade in markets as domestic politics return to the fore, while investors remain wary of the deepening turmoil in Donald Trump’s White House. Trading in real non-deliverable forwards was unusually active in Asian hours, and signaled that the currency is poised to weaken.