The collapse of Brazil’s currency is becoming emblematic of all the progress in the past decade that the nation has now squandered.

The real tumbled to the lowest level since Brazil introduced the tender in 1994, wiping out the gains -- as well as the hard-earned credibility -- that former President Luiz Inacio Lula da Silva won over the course of his tenure. Lula overcame skeptics who worried that he would push Brazil to default and helped Latin America’s biggest economy win its first-ever investment grade as the nation transformed into an emerging-market powerhouse.

Now, Brazil is relinquishing those achievements at an alarming rate as it wilts under the growing strain of an ever-expanding corruption investigation and a recession on pace to be the worst since the Great Depression. The real has plummeted 60 percent since President Dilma Rousseff, Lula’s handpicked successor, took office in 2011. In that span, Brazil has suffered three downgrades, with Standard & Poor’s cutting the country back to junk this month. 

“It’s the classic boom-to-bust story and most of it is home-grown,” Nicholas Spiro, a managing director at Spiro Sovereign Strategy, said from London. “Brazil was one of the most-compelling investment stories and now its fiscal credibility lies in tatters.”

Brazil’s currency sank 2.1 percent Wednesday as of 4:37 p.m. in Sao Paulo to 4.1356 per dollar, bringing its decline over the past five days to 7.4 percent. It set a new intraday low of 4.1441 per dollar.

The real’s depreciation has accelerated in recent months amid calls to impeach Rousseff, growing opposition in Congress to her fiscal austerity measures and widening fallout from a bribery scandal at the state-run oil company. Rousseff has also had to contend with the collapse of raw material prices and the prospect of the first increase in U.S. interest rates since 2006.

Under Lula, the founder of Brazil’s Workers’ Party, the country thrived as it rode a surge in commodity prices. The real jumped 113 percent during his time in office from 2003 through 2010, the most in emerging markets. Stocks reached their peak during his last year as president, increasing sixfold during his tenure despite a selloff during the global financial crisis.

With Brazil’s new-found wealth, Lula boosted government spending and subsidies to the poor, measures that helped push unemployment to a record low and lift 35 million Brazilians out of poverty over the past decade.

Rousseff sought to build on those accomplishments by increasing spending as economic growth began to slow. But the push backfired, fueling the fastest inflation since 2003 and swelling the country’s debt load.

“The government has been spending since 2011 trying to avoid a downturn in the economy,” said Enestor dos Santos, principal economist at BBVA in Madrid, Spain. “Now we see a worsening external scenario at a time we don’t have fiscal room to implement counter-cyclical policies. And on top of all of the country’s problems now is the political instability.”

Rousseff’s press office declined to comment when asked by email about government policies that contributed to the weakening of the real. 

While Brazil is becoming riskier in the bond market, its borrowing costs are still a fraction of what they were in the early Lula years. Efforts to shore up the fiscal situation also got a boost early Wednesday when Brazil’s Congress upheld the majority of presidential vetoes that are designed to block spending increases, including a key measure that prevents people from receiving higher pension payouts at a younger age.

Gabriela Souza Dias, a 24-year-old travel agent in Sao Paulo, embodies the frustration that many Brazilians feel. She fears the slump in the currency and Brazil’s mounting woes may cause her to lose her job.

“It really gets in the way of life,” Souza Dias said. “We are in paralysis.”

— With assistance by Anna Edgerton, Filipe Pacheco, Paula Sambo, and Ney Hayashi Cruz