Brasília – The Brazilian government is taking new measures in an attempt to minimise the imbalance between the dollar and the Brazilian currency (real). Last Tuesday (26th), – when the dollar reached its lowest value relative to the real in the last 12 years – the minister of Finance, Guido Mantega, had already signalled that the economic team would adopt measures to this end. This Wednesday (27th), the Official Gazette includes Provisional Measure #539, which authorizes the National Monetary Council to set forth specific conditions for negotiation of derivatives contracts.
According to the provisional measure, in the case of bonds or securities operations involving derivative contracts, the maximum fixed rate becomes 25% on the value of the operation.
Derivatives are called such because their price derives from another asset traded in the financial market, and is often used as a protection of investment. It may also be a bet, on the part of investors, on an even greater decline of the dollar value.
The Official Gazette also includes the Decree #7,536, which incorporates new changes in the Tax on Financial Operations (IOF, in the Portuguese acronym). According to the decree, whenever the loan operation is agreed upon for a minimum deadline of more than 720 days and settled early, investors will have to pay delinquent interest and a fine.
After the change, the IOF will be charged at an aliquot of 1%, on the agreed value, which is the asset’s total in relation to the derivative bond.
*Translated by Gabriel Pomerancblum
