(Bloomberg) -- Brazilian markets missed out on a global rally on Wednesday as the sudden dismissal of the top executive of state-owned Petroleo Brasileiro SA sparked fresh concerns over government interference at the oil giant.

The benchmark stock gauge dropped 0.5%, with Petrobras leading losses with a decline of as much as 8%, the biggest intraday slump since it announced a lower-than-expected dividend on March 8. The real fell as much as 0.8% in Sao Paulo, and even after trimming most of the losses following US CPI data, still trailed emerging-market currencies — the Mexican peso, one of its closest peers, rose 1.2%.

The declines follow the government’s decision to fire Petrobras CEO Jean Paul Prates on Tuesday night after a months-long controversy over dividend payments. Prates was formally dismissed at a board meeting Wednesday, which also terminated Sergio Caetano Leite as chief financial officer. 

Read more: Brazil’s Lula Cleans House at Petrobras, Firing Its CEO and CFO

Prates’ ouster “appears to be an escalation of the push to intervene in the company,” which is likely to raise questions among investors over the company’s governance, said Jefferies analyst Alejandro Anibal Demichelis. The news prompted the firm to downgrade the stock to hold from buy, slashing the price target of its ADRs to $17.70 from $21.20. 

President Luiz Inacio Lula da Silva tapped Magda Chambriard, who led the country’s oil regulator in the 2010s when it licensed vast exploration areas on land and offshore, for the post. She’s closely aligned with the ruling Workers’ Party and has been a vocal supporter of refinery expansions, a top priority for Lula as he seeks to use the company to stoke economic growth.

Investors are keeping a more cautious approach when looking at the company as they wait to better understand Chambriard’s mandate at the helm of the company. 

“The change in the company’s command does not make clear which principles will be maintained and which ones will be modified,” said BB Investimentos analyst Daniel Cobucci in a note to clients. That uncertainty prompted the firm to cut Petrobras’ rating to neutral.

“Even with good results and prospects for cash generation and dividends, the risk-return relationship is unfavorable, suggesting the need for greater caution,” Cobucci added.

Read More: Petrobras’s Next CEO Is an Oil Veteran Who Champions Exploration

Government meddling is a frequent cause of worry for Brazil investors. Just last week, traders dumped the currency and sent swaps jumping after a split within the central bank’s board on interest rates caused them to reassess policymakers’ stance on inflation once the current bank chief leaves the post. Back in March, the government’s decision to lower Petrobras’ dividend payout also roiled assets. 

The risk perception about Brazilian assets should worsen amid uncertainty about the company’s transparency when it comes to its investment policy and future dividend payouts, said Patricia Urbano, a fund manager with Edmond de Rothschild.

(Updates to add Prates formal dismissal in third paragraph, BB Investimentos commentary in sixth, updates pricing throughout)

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