Brazil: President Temer allegedly caught on tape discussing ‘hush money’ - Rabobank

Stefan Koopman, Market Economist at Rabobank, notes that the Brazilian President Temer has allegedly been caught on tape discussing ‘hush money’ which raises political risk for the country.

Key Quotes

“This hugely raises political risk as it could influence the Electoral Court ruling on the validity of the Dilma-Temer ticket in the 2014 election due between June 6-8, and in the worst-case scenario Temer would have to step down and be replaced by House speaker Rodrigo Maia, who would have to call for new (indirect) elections in Congress within 90 days.”

“The lack of governability --at least until the uncertainty about the country's leadership is solved-- will push back economic reforms, and even if discussions on reforms do return later in this presidential term, their timing is also highly uncertain. While that previous sentence could have been written about the US or Brazil in equal measure, the news still contributed to BRL being one of the only currencies not to beat the buck yesterday, slipping instead from 3.10 to 3.14, and we can probably expect more downside today for sure in the opinion of our Boy from Brazil, Mauricio Oreng.”