Angry Mladic ejected from U.N. war crimes court
8 de julho de 2011Paulo Sergio Passos is named minister of Transportation
12 de julho de 2011Brazil took further action to end a rally in the real after repeated efforts to weaken the currency this year failed to prevent it strengthening to a 12-year high against the U.S. dollar.
The world’s second-largest emerging market will require that banks make non-interest bearing deposits with the central bank equivalent to 60 percent of short dollar positions that exceed $1 billion dollars or their capital base, whichever is smaller, the central bank said in an e-mailed statement after markets closed on July 8.
The rule, which banks will have five working days to implement, amends a regulation announced in January that required banks to pay deposits on short positions above $3 billion. A short position makes money if the asset price falls.
Brazil is seeking to improve the working of the currency spot market and reduce bets against the dollar which reached $14.7 billion in June, the central bank said. June’s short positions were up from $9.3 billion in May and the highest since December.
The real rose to as high as 1.5524 per dollar last week, the strongest level since 1999, as investors increased demand for higher-yielding assets amid easing concern over Greece’s debt crisis. Brazil’s government has repeatedly complained that a stronger currency harms its exporters while rich nations boost their own exports by devaluing their currencies.
The central bank is trying to limit the real’s appreciation by making it more expensive to hold short positions on the dollar, Tony Volpon, a Latin America strategist at Nomura Holdings Inc. in New York, said in a July 8 phone interview.
‘Distortions’
“It will create a lot of distortions,” Volpon said. “Markets could be a little volatile for a few days.”
The measure is unlikely to be effective since Brazil’s interest rates are so high that investors will find ways to bring money into the country, Volpon said.
The real has gained 48 percent against the dollar since the start of 2009, the most among 25 emerging market currencies tracked by Bloomberg.
Policy makers raised interest rates at all four of their meetings this year, to 12.25 percent, and traders are betting they will raise rates twice more this year, according to Bloomberg estimates based on interest rate futures. Brazil’s interest rates are the highest in the Group of 20 Nations.
The real weakened 0.6 percent to 1.5625 per U.S. dollar on July 8.
Higher Tax
In October, Finance Minister Guido Mantega tripled to 6 percent a tax on foreign investors’ fixed-income purchases. On March 29, President Dilma Rousseff’s administration increased to 6 percent a tax on new corporate loans and debt sales abroad by banks. A few days later, she applied the higher tax to renewed, renegotiated, or transferred loans of as long as two years in length. Companies previously paid a 5.38 percent tax on loans of up to 90 days and zero tax when the operation exceeded three months.
The central bank bought $36.2 billion in the spot market in the year through June 24, almost as much as the $41.4 it bought in the whole of 2010. The bank has also intervened in the futures market by selling reverse currency swaps.
“The currency war continues because the recovery in advanced countries has led to expansionary monetary policies,” Mantega told reporters in Paris on July 7.
