Brazil Is Reeling From Weakness In The Dollar

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Brazil has already introduced one big foreign-investment tax to prevent its economy and currency from overheating, but it wasn’t enough.

Bloomberg: Brazil’s real is up 1.6 per cent this month, even after imposing a tax in October on foreign stock and bond investments and increasing foreign reserves by $9.5 billion in October in an effort to curb the currency’s appreciation. The real has risen 33 per cent this year.

“We have to be careful that our exchange rate doesn’t appreciate too much as to deindustrialize the country,” Marcos Verissimo, chief of staff at Brazil’s state development bank known as BNDES, said yesterday at a conference in Sao Paulo. “The capital goods industry has suffered tremendously.”

Russia and Korea are also struggling with vicious currency appreciation.

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