PF Investigations and Political Risk: The Impact on Assets and Foreign Exchange

The Executive branch's declared non-interference is received ambivalently by markets: on one hand, it wards off the immediate fear of a drastic institutional rupture; on the other, it maintains the perception that the regulatory environment and the progress of investigations will remain on the volatility radar indefinitely. With 12-month accumulated IPCA at 4.44% — after fluctuating from 4.26% 7 days ago to -4.31% over 30 days —, the cost of living and managed inflation remain under monitoring, though momentarily losing prominence to the political risk embedded in interest rate futures and the stock exchange.

Over the next 30, 90, and 180 days, the Brazilian market is expected to navigate between the structural reform agenda and the heat of political disputes, keeping the exchange rate pegged in the R$ 5.16 to R$ 5.20 range, barring additional external shocks like commodity pressures or global volatility. In the short term (30 days), volatility will likely concentrate on assets sensitive to government regulation; in the medium term (90 days), the focus will shift to the formal developments of Federal Police inquiries; and in the long term (180 days), fiscal sustainability and budget discipline will dictate relative prices.

Given this institutional uncertainty, the recommendation for retail investors is rooted in the Tradition of Value and building a solid margin of safety, avoiding excessive exposure to speculative assets whose fundamentals depend exclusively on Brasília's political mood. Secondly, diversify globally by dollarizing part of your assets to protect against abrupt exchange rate swings, and maintain high-quality fixed-income liquidity.