Brazilian stocks and the real currency surged on Jan. 2 as President Jair Bolsonaro's administration announced a series of measures to reduce the size of the state, Reuters and the Financial Times reported.
Brazil's benchmark Bovespa stock index gained as much as 4.1% to reach a new high of 91,478.84 on Jan. 2, before dropping slightly to end the day up 3.6% at 91,012.31 as of 9:23 p.m. GMT. The real strengthened 2.4%, marking the currency's best day in more than seven months.
Among several proposals, Economy Minister Paulo Guedes vowed to lower the country's tax burden to 20% of GDP from 36% at present. He also said he would cut protectionism in the market, as well as lower the share that state banks have in the credit market.
Guedes was also reported to have drafted an executive decree for pension reform in the country, which could result in savings of up to 50 billion reais in the next 10 years.
Other moves by Bolsonaro include giving the Agriculture Ministry oversight of forestry services, according to Bloomberg News.
Meanwhile, other markets in Latin America followed Brazil's lead. Argentina's MerVal bourse was up 2.65% on the same day to reach 31,096.63 while the Mexican IPC index was up 1.55% to a 42,284.85 figure. The strengthening of the Argentine and Brazilian bourses helped push the MSCI Latin American shares index to a 3.79% increase in the day to 2,663.19.
As of Jan. 2, US$1 was equivalent to 3.81 Brazilian reais.