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* Lula sworn in on Sunday, slams Bolsonaro’s threats * Brazil finance minister vows to ‘restore’ public accounts * Next Petrobras CEO says he will change fuel price policy * Peru’s CPI up 0.79% in Dec; annual inflation reaches 26-yr high (New throughout, updates prices, market activity and comments) By Bansari Mayur Kamdar Jan 2 (Reuters) – The Brazilian real fell in the new year’s first trading session after Luiz Inacio Lula da Silva was sworn in as Brazil’s president, while stocks in Latin America’s largest economy fell with state-run oil company Petrobras leading losses. The real fell 1.5% against the dollar in thin trading on a federal holiday in the United States. At his swearing in, Lula delivered a searing indictment of far-right former leader Jair Bolsonaro, who left Brazil for the United States on Friday after refusing to concede defeat. Lula also vowed a drastic change of course to rescue a nation plagued by hunger, poverty and racism. His speech highlighted his vision of a growth-inducing state and also criticized the spending ceiling and labor reform, said Guide Investimentos in a note to clients. Finance Minister Fernando Haddad said Lula’s government will not accept the “absurd” 220 billion-real ($41.19 billion) primary deficit forecast in this year’s budget, indicating it will work to make it smaller. The real was the best-performing currency in the region in 2022 but gains were limited as concerns about fiscal spending under the new government offset surging commodity prices. “We still believe the Fed will remain hawkish, the USD holds its safe haven status while transition to a new government will feed defensive positions,” said analysts at Rabobank in a recent note. Sao Paulo’s stocks dropped 3.3%, with financials and energy stocks weighing on the index. Brazil’s state-run oil company, Petrobras, slid 6% after Lula signed a decree on Sunday extending for 60 days an exemption for fuels from federal taxes, a measure passed by his predecessor aimed at lowering their cost. Petrobras’ incoming chief executive said on Friday he planned to tweak the country’s fuel price policy, but said investors need not worry. The Mexican peso slipped 0.1% against a firm dollar. Peru’s sol was flat after data showed the country’s inflation rate rose 0.79% in December and reached 8.46% for 2022, the highest annual measurement in the past 26 years. Chilean markets were closed on Monday. In central and eastern Europe, Hungary’s forint eased slightly, while its peers edged higher as investors assessed 2023 prospects after a tumultuous 2022 when inflation soared to double digits, and central banks ramped up interest rates. Key Latin American stock indexes and currencies at 1928 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 954.51 -0.2 MSCI LatAm 2076.22 -2.45 Brazil Bovespa 106102.53 -3.31 Mexico IPC 48945.39 0.99 Chile IPSA 5262.43 0.25 Argentina MerVal 207764.59 2.81 Colombia COLCAP 1287.88 0.14 Currencies Latest Daily % change Brazil real 5.3608 -1.52 Mexico peso 19.4750 -0.01 Chile peso 846.9 0.00 Colombia peso 4847 0.00 Peru sol 3.805 -0.05 Argentina peso (interbank) 178.1000 -0.54 Argentina peso (parallel) 342 1.17 (Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Additional reporting by Paula Arend Laier Editing by Matthew Lewis and David Gregorio)