FX: Brazil imposes foreign investment tax

Brazil’s decision to impose a 2% tax on fresh foreign investments in equities and fixed instruments on October 20 had the expected result and the Brazilian real came under quite strong selling pressure. The fact that the government is taking such action shows just how far many of the emerging markets have developed. A source close to the BM&F Bovespa, the country’s securities, commodities and futures exchange, says that the move is aimed as much at domestic investors repatriating money as at foreigners.