http://globaleconomicanalysis.blogspot.com/2011/07/brazil-charges-1-tax-on-bets-against-us.html
FDI Will Reverse, Real Overvalued
My comment at the time : I am inclined to agree with Otavio who says the Real is "extremely overvalued".
I see no reason to change my stance now.
It's important to realize Brazil is not a passive victim. Inflation is rampant and government spending is a "whopping 40 percent of gross domestic product" according to Alberto Ramos, Latin America economist at Goldman Sachs in New York, as noted in Guido Mantega Mulls New Currency Measures
At some point FDI and hedge fund bets on the Real will reverse in a spectacular way. I suspect it will be when China slows taking commodity prices with it. However, reversals can happen at any time.
Certainly the situation is unstable, much like it was with the the Icelandic Krona before Iceland imploded.
FDI Will Reverse, Real Overvalued
My comment at the time : I am inclined to agree with Otavio who says the Real is "extremely overvalued".
I see no reason to change my stance now.
It's important to realize Brazil is not a passive victim. Inflation is rampant and government spending is a "whopping 40 percent of gross domestic product" according to Alberto Ramos, Latin America economist at Goldman Sachs in New York, as noted in Guido Mantega Mulls New Currency Measures
At some point FDI and hedge fund bets on the Real will reverse in a spectacular way. I suspect it will be when China slows taking commodity prices with it. However, reversals can happen at any time.
Certainly the situation is unstable, much like it was with the the Icelandic Krona before Iceland imploded.
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