Brazilian Real Plunges 8.2% to R$5.40 After Lula Victory, Largest Daily Drop Since 1999

The Brazilian real plunged 8.21% against the dollar on Monday, closing at R$5.4029, its highest level since January and the largest daily jump since January 1999, following President Luiz Inácio Lula da Silva's unexpected re-election victory. The currency briefly surpassed R$5.60 in the morning as markets reversed positions built on expectations of an opposition win, before exporters' dollar inflows tempered the move. The Ibovespa stock index fell 13.88% after triggering a circuit breaker, while long-term interest rates surged up to 3 percentage points. Markets now await signals from the new government on its economic team and fiscal policy, with names like Piauí Governor Rafael Fonteles and Vice President Geraldo Alckmin floated for the Finance Ministry. The Treasury intervened by repurchasing government bonds to help stabilize markets.