Monday, October 4, 2010

Brazil Fighting Back To Contain the Real Appreciation: Raises Tax of Fixed Income

It could not have been an interest rate move, not between a runoff election, and the central bank would eventually run out of money to buy US dollars. So Brazil just announced that it will raise the taxes on foreign investments in fixed income securities to 4%, up from a previous 2%.

The Brazilian Finance minister says that the tax raise is to discourage dollar inflows into the country.

Tomorro will be a very interesting day to take advantage of any short lived reaction.

Brazilian Real vs. Chinese Yuan, 1 year chart:

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