Brazilian markets plummeted on Thursday as allegations that President Michel Temer condoned bribes to silence a key witness deflated investor optimism about the prospects for his ambitious pension and labor reform agenda.

Brazil’s benchmark Bovespa stock index closed 8.8% lower, its biggest daily decline since the 2008 financial crisis. Trading had been halted for an hour after a 10% drop triggered a circuit-breaker mechanism.

Blue-chip stocks such as lender Itaú Unibanco Holding SA and state-controlled oil company Petróleo Brasileiro SA dragged the index lower.

The declines slashed $7.7 billion off the market values of Itaú and Petrobras.

The Sao Paulo stock exchange saw 3.1 million transactions, breaking a previous record set in October 2014, the day former President Dilma Rousseff won a narrow runoff election, according to exchange operator B3 Bolsa Balcão Brasil.

Temer was caught on tape encouraging a prominent executive to pay a monthly fee to keep jailed former House Speaker Eduardo Cunha silent in the country’s biggest-ever graft probe, sources said on Wednesday, confirming a report in newspaper O Globo.

“Brazilian stocks and assets and their currency have rallied very strongly up until really today. It’s a big pullback and … it at least brings the risk up to the surface again,” Alliance Bernstein Managing Director of Equity Product Management Eric Sprow said.

The report threatened to torpedo a two-year rally in Brazilian assets as traders quickly reassessed the chances of success for efforts to streamline the country’s social security system and reform labor regulations. As a result, policymakers’ attempts to curtail the growth of public debt and foster economic growth may also be in doubt.

Strategists at J.P. Morgan Securities and UBS Securities downgraded their recommendations on Brazilian equities to “neutral,” citing increased risks to the implementation of structural reforms.

For more on Brazil, watch Fortune’s video:

Trader Thiago Castellan at São Paulo-based Renascença brokerage said: “For the market, it’s not a question of whether Temer will be ousted or not. The question is whether it will be quick and for how long reforms will be delayed.”

Temer denied the allegations on Thursday, saying he will not resign. His remarks disappointed traders who had hoped for a swift resolution to the political crisis, putting renewed pressure on Brazilian stocks and currencies going into the close.

Policymakers Spring to Action

The Brazilian real slumped 8% to 3.38 reais per U.S. dollar, the biggest percentage drop since the currency was devalued in 1999, wiping out its gains in 2017, while bond prices tumbled.