Investors stampeded out of Brazil on Monday, tanking its markets, after President Jair Bolsonaro’s completely unexpected move to replace the head of the national oil company, Petrobras, with a retired general. Bolsonaro announced the decision Friday, and later declared he had plans to intervene in other firms.
The huge market sell-offs, which also struck Brazil’s currency and sovereign bonds, reflected fears that Bolsonaro may be preparing to intervene much more aggressively in the economy, with the aim of boosting his sagging polls ahead of the 2022 presidential election. Bolsonaro is still the favorite to win, but the surprise popularity surge he enjoyed during a pandemic that he has so badly mismanaged appears to be running out of steam.
By taking control of Petrobras, the country’s largest firm, he hopes to lower consumer fuel prices, which have become a source of friction with part of the electorate. Truckers, in particular, have threatened to strike over the issue.