$hitibank protests Brazil's tax on foreigners' purchases of stocks and bonds

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Brazil Tax May Encourage More Measures, Dennis Says (Update1)
By Veronica Navarro Espinosa


Jan. 19 (Bloomberg) -- Brazil’s success in curbing the rally in the real by imposing a tax on foreigners’ purchases of stocks and bonds is a “scary” and “dangerous” precedent, said Citigroup Inc. equity strategist Geoffrey Dennis.

The success of the tax may encourage officials to adopt more measures to stem the currency’s appreciation, Dennis said at a conference organized by the Brazilian-American Chamber of Commerce in New York.

“It’s kind of scary because it might mean that the government wants to do more things over time should the currency stay strong,” Dennis said.

The real has weakened 3.1 percent against the dollar since the government implemented a 2 percent tax on the purchases of equity and fixed-income assets by overseas investors on Oct. 19. The currency surged 33 percent last year, the best performance among 16 major currencies tracked by Bloomberg, as an accelerating economic recovery and growing demand for commodities lured foreign investors to the country. ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aVHkmMWTNSZs&pos=7