Updated 01:30 AM EDT, Sat, Oct 24, 2020

Brazil's Real Drops to Its Lowest Level Due to Political Unrest?

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Brazil's real dropped to its lowest level as President Dilma Rousseff fights attempts to oust her from her position.

The country's currency plummeted 0.1 percent to 3.8734 per dollar, its lowest level on a closing basis since Oct. 28, after it dropped as much as 1.3 percent, Bloomberg reported.

"The mounting political turmoil is definitely not helping the government to address the fiscal gap and is even dragging out the potential recovery further with the Brazilian real expected to remain under pressure," said Arnaud Masset, an analyst at Swissquote Bank SA in Gland, Switzerland, as quoted in Bloomberg's report.

The real is the worst performer this year amid 31 major currencies, the news outlet added. Rousseff fights to seek support for measures aimed to reduce the deficit and steer clear of additional credit-rating cuts while her popularity sinks and the economy falls. In the central bank's weekly survey, analysts expect Brazil's economy to contract 2.67 percent next year, compared with a prediction for a 2.31 percent drop last week.

Last week, Moody's Investors Service put Brazil's Baa3 rating on review "for a downgrade citing the challenges Rousseff's government faces in shoring up fiscal accounts while a corruption scandal has Congress in gridlock," Bloomberg wrote. The ratings company does not expect the situation to get better in 2016.

Meanwhile, thousands of protesters continue to pour to the streets demanding for Rousseff's resignation. A demonstrator even expressed the need for "a military coup," adding that Brazil was "better off during the military dictatorship," the New York Times reported. This period of military rule from 1964 to 1985 suffered hyperinflation and prevalent human rights abuses.

Such views, which were considered as unmentionable a year ago, are signs that Brazilians will not tolerate graft scandals and economic mismanagement that have illustrated Rousseff's leftist administration, the New York Times wrote. Hardly any political analysts believe that the Brazilian military's intervention could do much, but Rousseff and her supporters describe the impeachment efforts are similar with a coup.

A congressional committee is considering Rousseff's impeachment for allegedly violating budget laws to boost spending during her 2014 re-election campaign, CBC wrote. Lower House Speaker Edgardo Cunha opened impeachment proceedings on Dec 2 against Rousseff, who denied mismanaging public accounts and has vowed to fight impeachment with all legal tools at her disposal in order to conclude her second term.

Cunha, a former ally of the Brazilian president and who broke ties with her this year, is also slapped with formal charges for allegedly taking bribes in a huge corruption scandal involving state-run oil firm, Petrobras, CBC added.

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