Brazil takes new measure to stabilise currency rateMarch 13th, 2012 - 1:59 pm ICT by IANS
Rio de Janeiro, March 13 (IANS) The Brazilian government announced Monday a new measure aimed at checking the inflow of foreign speculative capital and stabilising the exchange rate of the Brazilian real.
According to the new policy, the government will levy a six-percent Tax over Financial Operations (IOF) on foreign loans and bonds that exit Brazil within five years, reported Xinhua.
Last year, the government imposed the six-percent IOF on foreign investments that leave the country within two years. Just two weeks ago, it again extended the tax’s coverage to foreign investments that leave within three years.
“The federal government adopted a measure to reinforce its decision to reduce the inflow of speculative capital, which enters the country to take advantage of the difference between the interest rates in developed countries and the Brazilian rate,” said Finance Minister Guido Mantega.
The excessive inflow of the US dollar has caused the greenback to depreciate against the Brazilian currency. The weaker dollar stimulated Brazil’s imports, but harmed the competitiveness of Brazilian exports and hurt its economy.
So far this year, the US dollar has depreciated 4.5 percent against the Brazilian real.
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Tags: bonds, brazilian currency, brazilian government, brazilian real, competitiveness, currency rate, developed countries, exchange rate, federal government, finance minister, financial operations, foreign investments, greenback, guido mantega, inflow, interest rates, rio de janeiro, six percent, speculative capital, xinhua