Brazil’s president and senior lawmakers were unwavering in their support for a major pension reform on Wednesday despite nationwide protests against the proposal and the dramatic expansion of a graft probe threatening the ruling coalition.
Moody’s Investors Service added a vote of confidence in the government, citing the ongoing progress of fiscal reforms as a reason for revising its outlook for Brazil’s sovereign credit rating to “stable” from “negative.”
Brazil’s currency and benchmark stock index both rose around 2.0 percent on Wednesday, leading a rally in Latin American assets after the U.S. Federal Reserve signaled a gradual pace for interest rate rises.
Wednesday’s developments underscored that the political momentum is still in President Michel Temer’s favor as he pushes head with an unpopular austerity agenda that has drawn opposition into the streets but retained the support of congressional leaders.
The public backing from legislative allies was particularly important after Brazil’s top public prosecutor moved on Tuesday to target dozens of senior politicians as part of a corruption probe centered on kickbacks at state oil company Petrobras.
Despite the snowballing investigation and well-organized union resistance, Thomaz Favaro, a political analyst with global consultancy Control Risks, said Temer has built a more robust coalition than his predecessor, Dilma Rousseff, who was impeached last year…