The Brazilian real's rate has been going down for the last three months. The currency is getting cheaper and has already lost 7.5% of its value against the U.S. dollar. Presently, the USD/BRL pair is trading at 2.14 reals per dollar. The austerity policy of the Federal Reserve system and sluggish growth of Brazil’s economy exerts direct influence on the real exchange rate and price levels in the country. The inflation exceeds the 6.5% target set by the central bank. The current state of affairs needs to be changed with the help of rate stabilization measures. Brazil’s Minister of Finance Guido Mantega offered to remove the 6% financial transaction tax on foreign buying of local bonds. This tax was imposed in 2009, when the Brazilian real was rising fast due to the flood of speculative capital. The decision on the tax cut may make the real stable and get the prices under control before the presidential elections 2014. “Today, with the market normalizing and the movement of the Federal Reserve to reduce its expansionist policies, we were able to remove this barrier,” Mr Mantega said. At the end of May Ben Bernanke, the Chairman of the Board of Governors of the U.S. Federal Reserve, announced that the Fed may begin to curtail the bond buying program from standard $85 bln per month. Although many experts consider that such measures may have a reverse effect, the large world's investors do not hurry to withdraw their capitals in order not to pay the taxes again in case of coming back to the Brazilian market.
