Brazil's financial markets has fallen in the aftermath of credit agency Standard & Poor's downgrading the country's sovereign debt to "junk" status.

The Brazilian real fell 2 percent to 3.88 per U.S. dollar by early Thursday afternoon and it would have dropped even further if the Central Bank hadn't intervened by selling some $1.5 billion on the spot market.

The benchmark Bovespa stock index was down 1.24 percent.

President Dilma Rousseff met in the morning with members of her cabinet and congressional leaders to discuss the downgrade and said it wasn't a catastrophic event.

Citing presidential advisers, the Folha d S. Paulo newspaper says Rousseff urged them to cut public spending.