The Brazilian real edged higher in value against the U.S. dollar on Wednesday after the government of the South American nation eliminated a 6 percent tax applied to international investors' purchase of bonds, Bloomberg reports.
The monetary unit of the largest economy in Latin America registered advances that climbed as high as 1.5 percent against the world's reserve currency, coming as a surprise after the real checked in with losses of 6.5 percent against the dollar during the month of May. Those losses were the real's worst against the greenback since September 2011.
Monetary policy director Aldo Mendes with the Brazilian Central Bank said earlier this week that the majority of worldwide monetary units have been slipping against the U.S. dollar, The Wall Street Journal reports.
"There's nothing I can do," the monetary policy director said, according to The Journal. "We only react when we aren't together with the others. If we're moving in step with the other currencies of the world, there's not reason to enter the market."
Finance minister Guido Mantega said ridding the market of the tax came as a result of changes to the global economy, according to The Journal.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.