
Bloomberg
Brazilians may be a year away from voting for their next president, but investors are already plenty worried.
Measures of implied volatility for the currency show traders pricing in big swings around the October 2018 vote, even as calm pervades in the near term. The split has taken the ratio between one-year and six-month implied volatility to the highest since early 2014. Investors are nervous that the country’s next leader will have a populist bent and won’t prioritise the economy and shoring up finances, key themes for the business community after years of political turmoil derailed growth and sent bond and stock markets on a wild ride.
Early polls show the most support for former President Luiz Inacio Lula da Silva, who is in the midst of fighting corruption charges, followed by far-right congressman Jair Bolsonaro, best known for his rants against a firm law-and-order stance.