5 percent ceiling of the official range
Brazil removes tax on foreign loans
BRASILIA (Reuters) Brazil canada goose uk shop removed a 6 percent tax on canada goose coats on sale some short term cheap Canada Goose foreign loans on Wednesday in a move that could help the central bank stem a recent depreciation canada goose uk outlet of the canada goose store local currency that uk canada goose outlet has threatened to stoke inflation.
The bank was able to limit the depreciation by announcing Canada Goose Online it was doubling the rollover of currency Canada Goose online swaps, derivatives that provide investors with hedge against currency losses.
The finance ministry removed the tax, called an IOF tax, on international loans with maturities of between six months and a year, saying it would help lower financing costs for Canada Goose Outlet local companies and banks.
think it serves both purposes; the government reduces the cost Canada Goose sale of foreign financing and at the Canada Goose Jackets same time opens Cheap Canada Goose coats the door for more dollars to limit the depreciation (of the real), said Jankiel Santos, chief economist at Espirito Santo Investment Bank.
also signals that the central bank may reduce Canada Goose Parka its forex program.
A weaker real raises the value of imports, adding inflationary pressure. Inflation has slowed recently, but remains very close to the 6.5 percent ceiling of the official range.
Finance Minister Guido canada goose Mantega later told reporters that the aim of the tax cut was not to tame prices but to normalize the currency market.
measure is not directed at inflation. We do not administer our currency to control inflation, said Mantega, adding that the biggest impact of the measure canada goose coats will be to help smaller banks to get cheap loans abroad.
Higher canada goose clearance inflation hurt domestic consumption and dragged down the economy at the start of the year. canadian goose jacket Brazil gross domestic product barely grew in the first quarter and could post even more sluggish growth ahead as investment and canada goose factory sale industrial output cheap canada goose uk drop.
The economic slump threatens to further dent the popularity of President Dilma Rousseff. She remains the favorite to win the Oct. 5 general election, however, due to record low unemployment and wide ranging social programs.
Citi analyst Kenneth Lam said the tax cut will not have much uk canada goose impact on corporate credit flows, but will be marginally positive for the local exchange rate.
After initial gains on Wednesday, the real weakened 0.5 percent to trade at 2.2888 per dollar.
The central bank started to offer currency swaps in August to stem the depreciation of the real after expectations of tighter monetary conditions in the United States sparked an exodus of capital from emerging economies.
In December, the bank slowed the pace of its currency intervention as it extended the daily offer of swaps until at least June 30.
Central bank chief Alexandre Tombini has signaled the bank could again slow the canadagooseoutleta pace of intervention after saying on May canada goose uk black friday 22 buy canada goose jacket cheap that demand for the swaps had decreased slightly.
Loans of a year or more already avoid paying the IOF canada goose black friday sale tax. Companies borrowing at a maturity of canada goose clearance sale less than six months will continue to pay the 6 percent IOF tax, Canada Goose Coats On Sale the finance ministry said. It added that the measure will cost the government 10.3 million buy canada goose jacket reais ($3.8 million) in tax revenues in 2014.
