The nation’s markets tumbled after leading newspapers alleged that President Michel Temer was taped approving bribes to silence rivals.
Editor’s Remarks: The scandal threatens to topple Temer’s government, which only came to power last August after his predecessor, Dilma Rousseff, was impeached. Temer is supposedly heard telling Eduardo Cunha, who was critical to Rousseff’s impeachment, to keep silent about something, the precise nature of which is unknown. In response to the news, Brazil’s benchmark Ibovespa stock index tanked 10.47%. The nation’s currency, the real, fell 7.69% against the dollar. The reaction is a severe blow to a government that had so far been welcomed by the market due to its plans to reform Brazil’s struggling public finances and unsustainable pension system.