By Himfr Ivy

Despite the promise not to intervene in currency markets in Australia, but as the global “currency war” has repeatedly upgraded, a further rise in foreign investment in Brazil yesterday to buy Brazilian debt in the financial transactions tax, to reduce hot money inflows and currency appreciation to curb. In two days, G20 finance ministers about the opening, the government intervention in currency markets and their impact will undoubtedly become a major issue.

Continued appreciation of real

The U.S., Japan and the euro zone a low interest rate policy, the pursuit of high returns, investors have the funds to invest in emerging market countries. At the same time, Brazil’s current benchmark interest rate as high as 10.75%, attracting a large number of foreign investors snapping high-yield bonds in Brazil, the Brazilian currency, the real has continued to rise.

Brazil’s Ministry of Finance announced late on 18 local time, will focus on foreign investors in Brazil’s financial transactions, fixed income tax rate from 4% to 6%, while foreign exchange rate derivatives trading from 0.38% to 6%, these measures come into effect from 19. In the October 4, Brazil Ministry of the above financial transactions tax by 2% to 4%.

Brazilian Finance Minister Mantega said the latest move is not intended to prevent long-term investment, but to discourage short-term speculation, thereby reducing the inflow of foreign capital over the scale and the real prices. If the foreign exchange market volatility, the Government may take more interventions. In addition, Mantega also called on States to stop the “currency war”, a common response to the weak dollar and to protect exports.

Brazil’s government, apparently hoping to improve on the taxation of foreign capital arbitrage, short-term hot money against the interest of the Brazilian market to stabilize the real currency. However, Brazil’s former central bank governor Fraga believes that the long-term real appreciation for the ease pressure on financial transactions tax increase will not play a substantive role.

In the expected depreciation of the dollar, many emerging market currencies appreciated significantly, coupled with rising commodity prices caused by imported inflation, the economies of these countries more uncertainty. Brazil’s central bank released the latest weekly market survey, analysts and economists in the country this year, inflation expectations raised by the 5.15% 5.2% 5 weeks for the third consecutive increase, above the central bank expected 4.5%.

Mantega the absence of the G20

Brazil’s Treasury spokesman, said Mantega will not attend the G20 meeting of finance ministers held in Korea in order to remain in the country participated in the study of possible monetary policy to control the excessive real appreciation.

Some analysts said that Mantega choose to remain in the domestic problem of dealing with their own currencies, seemed to imply that the G20 meeting of finance ministers of their not hold any hope. Foreign media also reported that a South Korean central bank official said the exchange rate for the current disputes between countries, the upcoming summit of the Group of 20 countries will not reach any substantive agreement on this.

Geithner even behind the U.S.

In addition to Brazil, the Euro group president, Juncker of Luxembourg in the Euro Group meeting, also said that exchange rate volatility has a negative impact on a global scale, the European response to the exchange rate to make the appropriate response.

U.S. dollar falling against the recent, 18, U.S. Treasury secretary said the United States does not seek to stimulate exports through currency devaluation and the economy.

Accused of many emerging market countries to step up the Federal Reserve printing money causing the continuous depreciation of U.S. dollar and triggered a lot of money flock to these markets. In this regard, Geithner said, whether the United States or any other country, it is impossible to economic prosperity through currency devaluation and increased competitiveness. Some analysts said that the recent dollar continued to fall sharply, but U.S. authorities have refused to comment, Geithner’s speech finally broke the silence of the U.S. government attitude, which can be seen as the dollar began bottoming out signal.

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