TO gain control over the on-going battle against currency appreciation, Brazil has introduced a new tax called the Financial Transactions Tax. To curb currency speculation the Govt has notified the new levy on July 27 which is to be charged at 1% on short dollar positions in the futures market.

According to the Finance Ministry, the tax can be hiked to 25% at the government's discretion.

Finance Minister Guido Mantega said that the measure was adopted in response to excess dollar selling on the futures market. Mantega stated that speculators have been betting on the dollar's depreciation or the real's appreciation, meaning they profit when this is the outcome.