The USD rose from BRL 3.13 to BRL 3.34 on a scandal that could oust Brazilian president Michel Temer. As for local steelmakers, the increase could mean improved revenues in BRL resulting from exports on an appreciated USD.
However, the increased USD over the BRL would need to last for a period of time in order to provide a stronger foundation for local steelmakers, who see exports as a provisional solution for still-sluggish domestic demand in Brazil.
Brazilian president Michel Temer was secretly taped by a food company executive discussing a payoff for a once-powerful politician jailed for corruption. JBS chief executive, Joesley Batista, made the secret tape as part of a plea bargain presented to prosecutors.
The Brazilian Supreme Court of Justice allowed Temer to be investigated. If the tape is proved to be true, it could oust Temer from power, who in turn replaced impeached president Dilma Rousseff. The volatility could increase pressure over the BRL.