Brazilian Real Hits Its Lowest Point Since 2002; Rousseff Assures Fiscal Deficit Is 'Temporary'

The Brazilian real continues to plummet. After losing 1.752 percent on Wednesday, the currency hit its lowest point since 2002. A real is now 0.2658 U.S. dollars, and 1 U.S. dollar equates to 3.7598 reals.

The Sao Paulo Stock Exchange, which fell considerably on Tuesday, was up 1.95 percent on Wednesday, to 46,364.99 Bovespa index points, as the market waits for the government to put an end to one of the most aggressive rate-hiking cycles the world has seen. The announcement is expected for 6:00 p.m. ET (or 9:00 p.m. GMT) and "the probability of the bank keeping rates unchanged is as high as 83 percent, yields on interest rate futures suggest,"Reuters said.

Twenty-nine out of 30 economists surveyed by Reuters last week said they expected the Central Bank to maintain its benchmark Selic rate at 14.25 percent. Still, "the highest among the world's 10 biggest economies," Alonso Soto explained in the note published Wednesday.

A Temporary Fiscal Deficit?

On Wednesday morning, Brazilian President Dilma Rousseff said her administration will send new proposals to the Congress, aimed at covering the deficit in the projected 2016 primary budget. According to Spanish-language site Ambito, Rousseff told journalists that "the fiscal problems of the country are temporary, and rejected the opinions that assure that the prevision of a budgetary deficit for 2016 announced on Monday is disastrous for the country."

Despite the bad news, the iShares MSCI Brazil Index (ETF) (NYSE:EWZ) rose 0.88 percent on Wednesday, while the ProShares UltraShort MSCI Brazil Capped (NYSE:BZQ) ETF fell 1.78 percent. TheWisdomTree Brazilian Real Strategy Fund (NYSE:BZF) lost 1.9 percent.