The Ibovespa closed down today. The index closed the day at 99.056 points, but the drop during the day reached the level of 2%. However, at the end of the day, the index fell 1.2%.
The day on the Bovespa was marked by investors selling stocks and looking for safer assets. It was a flight to quality movement.
Global risk aversion, fearing a new economic recession, has forced the Brazilian Central Bank, for the first time since the 2009 crisis, to announce that it is going into cash to control the rise in the US currency. The Brazilian Central Bank has also announced that it will offer foreign exchange swap contracts.
Today, at an event promoted by BancoSantander in São Paulo, the Minister of Economy, Paulo Guedes, minimized global economic adversity. He said that he had no fear of being swallowed by the international market and that Brazil did not need Argentina to grow its economy.
In fact, the crisis in Argentina has affected and continues to affect the Brazilian economy. Guedes's phrase shows a mixture of arrogance and unpreparedness for the post of Minister of Economy.
The crisis in Argentina, Brazil's third-largest trading partner, affects everything from the Brazilian tourism industry to bus, beer and steel companies. To say that Brazil does not need Argentina is to ignore how the Brazilian economy works.
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