Reaction To Brasil's New 2% Tax On Foreign Capital Inflow; Stocks, Real Drop.

WSJ ONLINE Link/ BLOOMBERG Update/
Brasil's 2% tax starting today on all foreign investors for Real-denominated, fixed-income securities and stock purchases “to avoid an excess speculation in the stock market and in capital markets" brought swift market reaction.
Brasil's stocks dropped the most in four months and the Real tumbled. The Bovespa exchange plunged 11 percent on fears the tax will curb trading. Petrobras and Vale, the most heavily weighted stocks on the index, retreated more than 3.3 percent.
“Unfortunately this is going to raise in some people’s mind that Brasil remains a risky place to do business,” said Christopher Palmer of Gartmore Investment. “How many countries in the world are proposing capital control?”