Party Crisis in Sorocaba Exposes Institutional Instability and Capital Risk

The departure of the mayor of Sorocaba from the Republicanos party, driven by disagreements over family candidacies, represents another chapter in the deterioration of municipal political predictability, adding to our third negative news story about institutional friction in São Paulo this week and reinforcing a cautious bias for local markets. In foreign exchange, the commercial US Dollar closed quoted at R$ 5.1714, registering a 1.47% increase over the 7-day window, but showing a slight decline of 0.63% in the 30-day variation, reflecting the nervousness of economic agents in the face of recurring political noises that directly affect the perception of Brazil risk. This scenario of political friction occurs at a time when the economy is monitoring the Selic rate maintained at contractionary levels of 14.00% per year, an indicator that remains stable on the 7- and 30-day margins, but which raises the opportunity cost for productive investments while the institutional environment remains volatile. Inflation measured by the IPCA accumulated over 12 months stands at 4.44%, showing a disinflationary trajectory in the 30-day comparison with a drop from 4.31%, which theoretically would open room for relief in the cost of living, were it not for the political risk premium pressing financial assets.