Brazil's Lula to investors: No sweat over scandal
Two opinion polls on Thursday showed Lula would still win in the first round on Oct. 1 with the necessary absolute majority of votes.
Investors have grown concerned that increasing animosity among political parties because of the latest scandal could worsen Lula's chances of approving much-needed reforms to accelerate sluggish economic growth.
"Neither the political scenario nor the external scenario are good," said Jorge Knauer, Banco Prosper's foreign exchange manager.
Envoys of Lula's Workers' Party are accused of trying to buy a dossier to tie Geraldo Alckmin, an opposition presidential candidate, and Jose Serra, an opposition candidate for Sao Paulo state governor, to a kickback scheme centering on ambulance purchases.
Lula said in an interview with CBN on Friday that "it is not because of the scandal that the market has moved," adding that Brazil's economy was the most solid in 30 years.
Compared to 2002, when the perceived threat of a Lula government pushed Brazil to the brink of financial collapse, investors have so far taken this election in their stride.
Lula's already fragile coalition, made up of half a dozen parties from left to center-right, could shrink further in the election as many Workers' Party candidates may be associated with accusations of sleaze, political analysts say.