Brazilian markets plummet as allegations that President Michel Temer condoned bribes to silence a key witness deflate investor optimism about the prospects for ambitious pension and labor reforms. But as Kate King reports, Temer defiantly said he would not resign.
Hush money accusations have plunged Brazil back into political and economic turmoil Protesters calling for the President's resignation after the Supreme Court announced an investigation into whether he condoned bribing a potential witness in a major corruption probe Allegations, the President denies (SOUNDBITE) (Portuguese) BRAZILIAN PRESIDENT, MICHEL TEMER, SAYING: "At no moment did I authorize anyone to be paid so that they'd remain quiet. I did not buy the silence of anyone. I will not resign. I repeat, I will not resign." Those comments disappointing traders who'd hoped for a swift end to the crisis. Shares of state-controlled companies, lost about a fifth of their value, and the nation's currency fell over 7 percent While Brazil's stock index closed 8.8 percent lower, its biggest daily decline since the 2008 financial crisis. (SOUNDBITE) (Portuguese) MIRAE ASSET DIRECTOR, PABLO SPYER, SAYING: "This is a serious, brutal situation. If the allegations are true, we will stop advancing towards the investment grade, the circuit breaker was not activated out of the blue, the stock exchange fell a lot, more than 10 percent." Brazil's economy was already mired in recession the latest revelations leaving economists worried that promised pension and labour reforms will now be curtailed. SOUNDBITE (ENGLISH) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "I think that has caused some to question whether he was able to drive through the necessary structure reforms to really move the economy onward so I think the jury was probably still out ." 90 business and political leaders have so far been convicted as part of the investigation dubbed Operation Car Wash' But it seems the probe could yet bring down more than just public figures.