SAO PAULO (Reuters) – Investors on Friday welcomed the appointment of Santander's chief executive, Roberto Campos, to head the Brazilian central bank as a signal that President-elect Jair Bolsonaro will entrust economic and monetary policy to a team of economists market lover
Brazilian President-elect Jair Bolsonaro attends a meeting with elected governors in Brasilia, Brazil on November 14, 2018. REUTERS / Adriano Machado
The stock index of Bovespa in Sao Paulo rose to 2.65 percent on Friday and Brazil's real currency increased 1.2 percent against the dollar after Thursday's announcement by Finance Minister Paulo Guedes.
Analysts said Bolsonaro, a former captain and army lawmaker who admitted to having low economic knowledge, set up an experienced economic team to implement their plans to reduce government spending, simplify the complex fiscal system in Brazil and sell state-owned companies.
Campos, current treasury director of Banco Santander Brasil SA, with experience in commercial offices, will assume the central bank at the beginning of next year by Ilan Goldfajn.
Under Goldfajn, the bank's benchmark interest rate dropped to 6.5 percent from 14.25 percent in 2016 and inflation declined below government targets.
"I know Roberto Campos very well and I can guarantee that we will be in good hands. Where he worked, there were excellent results," said Rogerio Xavier, partner of SPX Capital, who manages some 40 million reais (11,000 million dollars) in assets .
Another indication of the Orthodox inclination of Bolsonaro's economic team was the appointment of former finance minister Joaquim Levy, current executive director and financial director of the World Bank, to be the next president of Brazil's powerful state development bank, BNDES[BNDES.UL], say the investors.
They also welcomed the announcement by Guedes, an economist and qualified investment banker, that the respected Treasury Secretary, Mansueto Almeida, an expert in fiscal policies, agreed to stay.
UBS economist, Tony Volpon, former head of the central bank, called this announcement "very positive" in a note to customers.
The central bank said yesterday that Carlos Viana, the counselor responsible for economic policy, agreed that Campos would remain in charge for a "considerable time".
Campos still has to be confirmed by the Senate when he returns in February.
But the markets saw their appointment as a sign that Bolsonaro will give his economic team led by Guedes full autonomy to drive the economy, avoiding the policies of nationalist and protectionist development he defended in the past.
Campos grandfather, Roberto de Oliveira Campos, was instrumental in the founding of the central bank of Brazil in 1964. He served as planning minister in the early years of the Brazilian military government from 1964-1985, which defends free market and foreign investment policies in Brazil , especially from the United States.
"We do not expect significant changes in monetary policy with Campos, and Goldfajn will continue until the new president is confirmed," said the Brazilian multi-year asset management firm in a note to clients.
Almeida retaining his role reinforces the team's liberal profile, said the investment agency XP Investments.
Presentation of Paula Laier information in Sao Paulo; Additional reports by Marcela Ayres in Brasilia; Written by Anthony Boadle; Edition by Daniel Flynn and Bill Berkrot