Meanwhile, money is flooding into Brazil. About $31 billion in foreign direct investment is expected this year. In turn, this news has upped their stock market and increased the value of the currency. The risk Brazil runs is the real getting too strong, which is a new problem for a country that has usually had to deal with inflation, reports Carl Mortished for Times Online.
This is what led to the tax: the country feared losing its foreign customers and exporters raised a ruckus, hence the 2% tax. While investors and the International Monetary Fund (IMF) initially balked, for the most part investors seem to feel the positives of growth prospects in Brazil outweigh the negatives of the tax.
For more stories about Brazil, visit our Brazil category.
- iShares MSCI Brazil Index (NYSEArca: EWZ): up 116.3% year-to-date
- Market Vectors Brazil Small-Cap (NYSEArca: BRF): up 86.7% year-to-date
- WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF): up 34% year-to-date