An exchange traded fund (ETF) that tracks the movement of the Brazilian real against the U.S. dollar has soared this week despite an attempt to cool the currency’s rise.
Brazil this week said it would extend a tax on offshore dollar loans.
WisdomTree Dreyfus Brazilian Real Fund (NYSEArca: BZF) has rallied to nearly $29 a share. It rose 1.5% on Friday.
This week, Finance Minister Guido Mantega suggested ways to control the rapid climb. Yet has Brazil given in to the currency’s’ brisk rise?
The real had its biggest jump since June 2010 as it rose to its strongest against the dollar since August 2008, and some analysts are calling for more of a push against the U.S. dollar, report Michael O’Boyle and Luciana Lopez for Reuters.
Brazil’s economy is solid, and some of the currency’s gains are unavoidable. The extension of the 6% tax is still in effect for those who borrow overseas, a move to keep dollars out, report John Lyons and Tom Lauricella for The Wall Street Journal.
Foreign money has been pouring in from excited investors and from those interested in cashing in on the 11.75% interest rate. [ETF Spotlight: iShares MSCI Brazil index (NYSEArca: EWZ)]
Tisha Guerrero contributed tot his article.