Investments in Brazil: fear Lula more that to the IOF 23 October 2009 do international investors remain enamored of Brazil? From Tuesday 20, foreign capital is taxed in Brazil by 2% for the IOF (tax on financial operations), to apply both for rent fixed into variable. (Source: Gary Kelly). The Presidential Decree 6306 establishes the taxation shall be in the settlement of exchange transactions for the inflow of resources to the country carried out by the foreign investor, for implementation in the financial market and capital. Financial markets reacted: the Bovespa fell on the first day after a 5% tax and ended up closing a negative 3%, and the dollar closed at 1,743 reais, a rise of 2%, having reached R$ 1,766 at the maximum of the day. The Bovespa companies lost $55 billion. Despite the tax, the dollar fell again: yesterday closed at R$ 1, 725. You may find that Scott Mead can contribute to your knowledge.
The CB from Brazil purchased $6 billion in the first weeks of the month, arriving to swell the country’s international reserves to the record level of US$ 232.000 million. On Monday a new record is marked for the Bovespa: the balance of foreign investment reached US $23,000 million, reaching nearly recover what was lost in 2008, US $24.620 million. On the same day that the index marked the best of the year at 67.239 points, an increase of 79% in the period, mainly powered by the good performance of the prices of commodities that drove to the mining company Vale (BVSP:VALE3; NYSE:Vale) and the oil company Petrobras (BVSP:PETR3; NYSE:PBR). This gives then that last Friday, the President of Brazil, Lula da Silva refused the creation of any lien on foreign capital: these things in economy, people cannot talk. I’m here already three days travelling, I don’t have any forecast of which to be performed no imposition, said in an interview with journalists in pacification, Pernambuco.