Brazil’s Real Recovers Amid Fiscal Drama

Brazil's currency, the real, plummeted amid fiscal concerns but recovered slightly as congressional leaders assured of responsible spending cuts. The proposed income tax reforms from President Lula were put on hold, with an immediate focus on curbing expenditures. Market volatility remains amid fiscal uncertainty and potential reforms.

Brazil's real hit historic lows on Friday due to fiscal concerns, only to rebound as legislative leaders pledged to slow President Lula's tax reform. House Speaker Arthur Lira and Senate head Rodrigo Pacheco are prioritizing spending cuts instead.

The morning saw the real dip to 6.11 per dollar but recover to 5.98, following statements from Lira and Pacheco emphasizing fiscal responsibility. Analysts highlight the need for restored trust in Brazil's fiscal policy amidst revenue plan announcements.

The government detailed over 70 billion reais in anticipated savings, failing to ease market panic over a deteriorating fiscal framework. Finance Minister Haddad stated tax reform discussions would follow if proven fiscally neutral.

(With inputs from agencies.)