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Under Lula, Brazil walks on the wild financial side
In the year to mid-June, Brazil’s currency, the real, fell against the dollar by 17 percent, the worst performance of any major currency over that period. São Paulo’s stock market lost 8 percent of its value, even as other emerging markets rallied. The reasons for this decline are not hard to guess: Investors are skeptical of Luiz Inácio Lula da Silva’s commitment to responsible fiscal and monetary policies, and wary of his renewed flirtation with a big state. Their concerns now appear to have been heard, at least in part. This month, both Lula and his politically influential wife, Rosângela “Janja” da Silva, went out of their way to support Fernando Haddad, the finance minister, and his efforts to cut the fiscal deficit. Markets responded: the real gained about 5 percent from its early-month low, and the stock market also rose.