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After recent large foreign currency purchases failed to stem the REAL ascent, Finance Minister Guido Mantega (Pictured) has doubled the tax to 4 percent from 2 percent on foreign purchases of bonds.
Mantega is trying to slow purchases from international investors because they have tripled bond holdings in three years to $89 billion usd, sending the REAL to a two-year high of 1.6735 per dollar on Oct.1.
“Many countries are taking currency measures and no one is sleeping on the job,” Mantega said. “The tendency is toward weakening their currencies. It’s not only a currency war. It tends to become a trade war and this is our concern.”
