Brazil’s Foreign Currency Reserves Slowly Decrease

brazilOn June 4, 2013, Brazilian Finance Minister Guido Mantega removed a 6% tax on foreign bond buyers. Stock market investments were not subject to the tax. The tax was set in place years ago to prevent hot money flows. During the financial crisis in 2008, many emerging market nations faced appreciating currencies because Western central banks contributed to excess liquidity in the capital markets. At the time, officials from the United States contended that a stronger America would lessen the economic downturn.

The South American giant has experienced a reduction in inflows. Foreign currency reserve assets dropped a smidge in May to $374.42 billion compared to $378.66 billion in April.



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