Brazil moves again to rein in the real

The change is intended to stop further appreciation of Brazil’s currency, the real, which is worth nearly 60 US cents today compared to 25 cents at he end of 2008.

Goldman Sachs, the investment bank, has said that the real is the most over-valued currency in the world.

However, Timothy Geithner, the US Treasury Secretary, warned on Tuesday that “no country around the world can devalue it’s way to prosperity”.

Mr Mantega’s announcement, made after markets shut on Monday evening, came just two weeks after he doubled the tax from 2pc to 4pc.

But the real continued to strengthen, appreciating by 1.6pc in the ten days after the first tax increase before rumours of further measures began to drive it down slightly.

One former governor of Brazil’s central bank, speaking after the first announcement, likened the policy to “shielding yourself from the sun with a sieve”.

Bank of America was equally dismissive, suggesting that the Brazilian government was engaging in “an impossible war” and that further action risked increasing volatility.

But Mr Mantega insisted in an interview last week that he did have the “weapons” needed to bring the real under control.

Brazil is an attractive target for foreign investment due to the demand for improved infrastructure combined with high interest rates.

Inflows of US dollars have slowed this month after $16bn was brought into Brazil in September following the share offering by Petrobras.

A spokesman for Brazil’s Finance Ministry said that Mr Mantega will not attend a meeting of G20 finance officials in South Korea this week, preferring to stay sat home to concentrate on curbing the real.

Mr Mantega said last month that the world was “in the midst of an international currency war” which he feared would seriously damage Brazilian exports.

His comments were a hot topic during IMF meetings in Washington earlier this month.

Dominique Strauss-Kahn, the IMF managing director, said he wanted to see the creation of “spillover reports” showing how country’s policies impact on others to help increase stability.