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Finance Minister Guido Mantega has not given-up the fight in his so-called "currency wars."
He announced that the tax on foreign fixed income, raised to 4% from 2% less than two weeks ago, will increase AGAIN...to 6%. Also a loophole that allowed foreign investors to avoid taxes on margin deposits, especially currency speculation, will be closed.
Foreign "hot money" has been pouring into Brasil, sending the REAL to a 7.1% gain in just the past three months...and past the psychologically important $1.70 level usd.
The new higher taxes will affect only new foreign monies.
Mantega insists : “This currency war needs to be deactivated."
Meanwhile, market strategist Gaelle Blanchard says Mantega's efforts are FUTILE, for Brasil and the other emerging markets: "They’ve lost the war before it’s even started. Money wants to go somewhere and the yield is in emerging markets. You can’t stop that unless you can also stop broad-based dollar weakness.”
http://www.bloomberg.com/news/2010-10-19/brazil-emerging-markets-have-already-lost-currency-war-socgen-says.html
