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S&P cut Brazil's credit rating to "junk."
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The Finance Minister announced new cutbacks in the 2016 budget.
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The Real and Bovespa continue to plummet.
On Thursday, Standard & Poor's downgraded Brazil’s sovereign credit rating to BB+. Although the move came as no surprise, the timing did catch many analysts and investors off guard, as the demotion was envisioned for later this year.
Related Link: S&P Cuts Brazil To Junk: What It Means
On Friday, Brazil's Finance Minister, Joaquim Levy, pointed out that the budget for 2016 includes cutbacks in public spending, aimed at reaching a primary surplus of 0.7 percent of the GDP – above the originally projected 0.5 percent.
In an interview published on French-language site Les Echos, the Minister said “short-term, we have to let our exchange rate evolve freely and proceed to fiscal cutbacks.”
Following these news, the Brazilian Real was down 0.829 percent. One real is now worth 0.2574 U.S. dollars. The currency is down 31 percent year-to-date, as concerns over the Fed rate hike and the sluggishness in the Chinese economy impacted on the overall Brazilian economy.
The Sao Paulo Stock Exchange was also down 0.68 percent to 46,187.4 Bovespa (INDEXBVMF:IBOV) index points. Over the past three months, the index has tumbled almost 14 percent.
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Shares of Petroleo Brasileiro Petrobras SA (ADR) (NYSE: PBR) fell 6.4 percent on Friday.
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The iShares MSCI Brazil Index (ETF) (NYSE: EWZ) lost 1.3 percent.
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The Market Vectors Brazil Small Cap ETF (NYSE: BRF) declined 0.26 percent.
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Brazilian Real Hits Its Lowest Point Since 2002; Rousseff Assures Fiscal Deficit Is 'Temporary'
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