Brazil Stocks Plunge 22% as Reforms Shake Nation

Brazil’s key stock market index, the Bovespa, fell 22.3% Wednesday, a one-day record, in the third day of precipitous drops since the announcement last week of a Draconian economic program that has shaken the nation.

Fernando Collor de Mello, who took office last Thursday, announced severe monetary and fiscal measures aimed at eliminating Brazil’s soaring inflation rate.

The measures have taken the equivalent of $115 billion, or 80% of the total money Brazil has, out of circulation.

The lack of funds to meet day-to-day needs has sent Brazil’s people and its companies on a frantic chase to sell assets like stocks, cars, dollars and gold to get cruzeiros, the new Brazilian currency established Friday.

Brazilian and multinational companies are complaining that they cannot get the cruzeiros they need to meet their payrolls.

“Our bank said they did not have funds,” a nervous Brazilian electronics company executive told reporters on television. Meanwhile, his workers remain unpaid.

The plunge in the stock market Wednesday follows another plunge of 20.9% Tuesday and a 12.2% fall Monday. The market has fallen 46% since March 13, the last day of trading before a three-day bank holiday was declared to avoid speculation in advance of Collor taking office March 15.