Real rallies as Dilma’s coalition crumbles

Brazilian president Dilma Rousseff’s biggest coalition partner Brazilian Democratic Movement Party or PMDB in short, took a decision last night voting unanimously that they will be leaving the government. This development further clouded the future of President Dilma, who is facing impeachment vote as early as next month. With PMDB gone, it is now increasingly likely that she will be impeached.

President Rousseff is facing impeachment for her role in scandal hit, state owned, oil major, Petrobras.

If Ms. Dilma, is impeached, she will temporarily lose her Presidency.

From this point, action taken by PMDB, not so surprising, PMDB has most to gain from Rousseff’s loss of Presidency. PMDB chief, Michel Tamer, will be taking her place and be the President if she is impeached. PMDB is the biggest party in Brazil’s 513 member parliament.

His party has already been preparing robust market friendly plans, which includes deficit reduction to restore Brazil’s economy, which is facing its worst recession in decades. Last year GDP shrank by -3.8%.

Ms. Dilma will have to secure one third majority in the lower house to avoid losing her presidency, which is increasingly looking bleak as more smaller coalition partners are expected to join PMDB and further isolating Ms. Rousseff.

Progressive Party, another junior coalition partner will be voting today on whether to back out of the coalition or not.

As Dilma’s future looked clouded, Brazilian Real became one of the top performers this year. Up 8.2% against Dollar, trading at 3.63 per Dollar.