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Brazil Impeachment Rally Likely to Be Short-Lived, Verde Says

  • President will seek unity, threatening unpopular budget laws
  • A government under vice-president also likely to struggle

Gains in Brazilian assets spurred by the move to impeach President Dilma Rousseff are unlikely to last as Latin America’s biggest economy struggles, Brazil’s Verde Asset Management said in a letter to clients.

Rousseff will seek to unite her allies during the impeachment process, so the government will have no scope to push through unpopular measures needed to improve fiscal accounts, the hedge fund said in a monthly report to clients. If Rousseff is impeached and Vice President Michel Temer takes over, an unelected government faced with corruption investigations, faltering growth and surging unemployment would also struggle to make changes such as delinking the minimum wage from inflation, the fund said.