Real continue to fall as scandal increases

The Brazilian real dropped in value again on Tuesday as the political scandal there continues to exert an influence over the financial markets.

Investors fear that more government officials will be pulled into the money-for-votes scandal that is currently being investigated by the Brazilian legislature through public hearings.

Especially worrying is the possibility that the reputation of Brazilian president Luiz Inacio Lula da Silva might be impacted by the allegations that his Workers Party paid congressmen to vote their way on issues before the legislature.

Tuesday’s testimony is to include that of the wife of one of the central figures in the scandal, an advertising executive who admits he made payments to the party to finance political campaigns but denies that the payments had anything to do with bribes for votes.

The real lost 0.73 percent to 2.482 to the dollar on Tuesday, following a drop of 2.7 percent on Monday, which was its biggest one-day loss in 14 months.

The real has lost more than 5 percent of its value in the past five trading days, but is still ahead by 8 percent for the year.

Meanwhile, the Sao Paulo Stock Exchange’s Bovespa index recovered a little bit on Tuesday, gaining 0.74 percent on the day after having lost 0.8 percent earlier. Stocks had dropped 3.4 percent on Monday.

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