Brazil gets real with currency speculation taxes

April 11 , 2011

Brazil’s Finance Minister Guido Mantega has announced a 6% tax will apply to foreign credit loans to businesses and banks, in a bid to curb currency speculation with the real against the U.S. dollar, website Lanacion.com.ar reported.

Mantega said the measure also aimed to combat foreign exchange arbitrage, whereby Brazilians would borrow from abroad at low rates and lend locally at high rates, the website reported.

The action was also taken to stop the flow of foreign capital, which in recent years has been one of the strongest in Brazil’s history, the story reported.

The Central Bank of Brazil reported flows of U.S. currency rose 70% to $US12.66 billion in March.

Related story: Southern Hemisphere countries tackle exchange rate woes

Source: www.freshfruitportal.com

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