Brazilian real hits all-time low against dollar

The Brazilian real hit an all-time low Tuesday, dipping in value to 4.03 against the dollar within minutes of the market's opening amid snowballing fears over a deepening economic crisis.

The currency has depreciated 33 percent against the greenback this year, as the economy entered recession and a corruption scandal at state oil giant Petrobras engulfed the political system.

Analysts attributed the latest slide to President Dilma Rousseff's difficulties in putting in place a plan to revive the economy and get a grip on a crisis that has already led to a downgrade of the country's credit rating.

"This sharp devaluation is not only due to the economic situation that Brazil is facing but also the immobility of the government," analyst Angelo Larozi told AFP.

"From my point of view, it seems the government has lost its way and doesn't communicate with Congress, that it sends up projects without planning."

Last week, Brazil announced a massive $17 billion austerity package in a bid to boost its ailing economy -- the world's seventh largest.

The government of Latin America's largest country announced in August that the economy entered recession in the second quarter and that the contraction could extend through 2016, becoming the longest since 1931.

That announcement was followed on September 10 by a shock downgrade of Brazil's sovereign credit rating to junk status by Standard & Poor's, sending the government scrambling to prevent an exit of foreign capital and to balance the books in an economy already rocked by plummeting commodity prices and the Petrobras scandal.

This year, the government expects the economy to contract a further 1.49 percent.

Larozi said he expected the real -- created in 1994 -- to continue to lose value against the dollar.

"We now expect that it may fall to 4.5 but the situation may worsen," he said.

Over the past few weeks, the real was already approaching its previous historic low attained in October 2002 on the eve of the election of former president Luiz Inacio Lula da Silva, when nervousness gripped the market.