Former Brazilian President Lula sentenced to prison; BRL rises

Luiz Inacio Lula da Silva, who served as President from 2003 to 2011 was sentenced to nine and a half years in prison on corruption charges. He has been convicted of money-laundering and bribe-taking by Judge Sergio Moro and will remain free on appeal. 

The case is part of the “Lavajato” (carwash) scandal. There are four more trials involving the former president. Moro found him guilty of taking BRL 3.7 million worth of bribes from an engineering company in return for contracts with Petroleo Brasileiro (Petrobras). 

Lula is the front-runner for the 2018 presidential elections. If the sentence is confirmed he won’t be allowed to run. He denied many times any wrongdoing. According to him, all accusations are part of a political campaign. 

BRL and equities up 

The Brazilian Real rose further after the conviction. USD/BRL is trading at 3.20, the lowest since May 18 (when a news organization announced it had President Temer on tape, asking for bribes). The real is rising for the third time against the US dollar and is among the top performers in the currency market. Brazilian equity prices are rising, with the Bovespa index up 1.30%, at the highest level in a one and half months. 

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