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Brazil Markets Cheered by Pro-Business Make-Up of Bolsonaro Team

Brazil Markets Cheered by Pro-Business Make-Up of Bolsonaro Team

SAO PAULO: Investors welcomed the appointment of Santander executive Roberto Campos to head Brazil’s central bank as a sign President-elect Jair Bolsonaro will entrust economic and monetary policy to a market-friendly team of economists.

Sao Paulo’s Bovespa stock index surged as much as 2.65 percent on Friday and Brazil’s real currency strengthened 1.2 percent against the dollar following Thursday’s announcement by incoming finance minister Paulo Guedes.

Analysts said Bolsonaro, a former army captain and lawmaker who has admitted having scant knowledge of economics, was assembling an experienced economic team to implement his plans to slash government spending, simplify Brazil’s complex tax system and sell off state-run companies.

Campos, currently the treasury director at Banco Santander Brasil SA with hands-on trading desk experience, will take over the central bank early next year from Ilan Goldfajn.

Under Goldfajn, the bank’s benchmark interest rate dropped to 6.5 percent from 14.25 percent in 2016 and inflation retreated to below government targets.

“I know Roberto Campos very well and I can assure you we will be in good hands. Wherever he has worked there have been excellent results,” said Rogerio Xavier, partner at SPX Capital, which manages about 40 billion reais ($11 billion) in assets.

Another indication of the orthodox slant of Bolsonaro’s economic team was the appointment of former finance minister Joaquim Levy, currently managing director and World Bank chief financial officer, to be the next president of Brazil’s powerful state development bank BNDES[BNDES.UL], investors said.

They also welcomed an announcement from Guedes – himself a trained economist and investment banker – that well-respected Treasury Secretary Mansueto Almeida, a fiscal policy expert, had agreed to stay on.

UBS economist Tony Volpon, a former central bank director, called these announcement “very positive” in a note to clients.

The central bank said on Friday that Carlos Viana, its board member in charge of economic policy, had agreed with Campos to stay in his position for a “considerable” amount of time.