Brazilian Markets Plunge 13.8% After Lula's Election Win; Central Bank Intervenes

Brazilian financial markets plunged Monday after President Lula's unexpected election victory over Senator Flávio Bolsonaro, the right-wing candidate favored by most analysts. The dollar closed up 8.2% at R$5.40, and the stock exchange fell 13.88% to 176,608 points, its worst daily drop since March 2020. Trading was halted multiple times by circuit breakers as the dollar spiked to R$5.60 and the Ibovespa index fell over 17% intraday. The Central Bank and National Treasury intervened, with the Treasury repurchasing R$7.067 billion in fixed-rate bonds to stabilize markets. The dollar's 12% intraday surge exceeded the 11.10% jump recorded in January 1999, when Brazil adopted its floating exchange rate regime. The Treasury announced a second bond repurchase operation for the afternoon.