UPDATE 1-Brazil central bank denies report of forex tax increase
Bruno Federowski
Reuters
(Recasts with central bank denial)
SAO PAULO, March 8 (Reuters) - Brazil's central bank denied on Thursday a report that the government could raise taxes on foreign exchange transactions to help deliver this year's fiscal target.
Bloomberg News had reported the move was "among the options being considered" by the Brazilian government, citing a source with direct knowledge of the issue.
Asked about the report, a spokesman for the central bank said it was not considering changes to the so-called IOF tax on foreign currency transactions.
Brazil's currency, the real, weakened as much as 1.9 percent to a session low of 3.1806 per U.S. dollar after the report. It later pared losses to 1.2 percent, in line with other emerging market currencies such as the Colombian peso.
Strong U.S. jobs data on Thursday strengthened bets on a Federal Reserve interest rate increase next week, threatening to lure capital away from higher yielding Latin American assets.
Finance Minister Henrique Meirelles said on Tuesday that Brazil could raise taxes or promote fresh spending cuts if necessary. He said there was no possibility of revising the 143.1 billion reais ($45.3 billion) primary deficit goal, which excludes interest payments.
Brazil last raised the IOF financial tax on the purchase of foreign currencies in cash in May to 1.1 percent.
($1 = 3.1579 reais)
(Reporting by Bruno Federowski; Editing by Richard Chang)
SAO PAULO, March 8 (Reuters) - Brazil's central bank denied on Thursday a report that the government could raise taxes on foreign exchange transactions to help deliver this year's fiscal target.
Bloomberg News had reported the move was "among the options being considered" by the Brazilian government, citing a source with direct knowledge of the issue.
Asked about the report, a spokesman for the central bank said it was not considering changes to the so-called IOF tax on foreign currency transactions.
Brazil's currency, the real, weakened as much as 1.9 percent to a session low of 3.1806 per U.S. dollar after the report. It later pared losses to 1.2 percent, in line with other emerging market currencies such as the Colombian peso.
Strong U.S. jobs data on Thursday strengthened bets on a Federal Reserve interest rate increase next week, threatening to lure capital away from higher yielding Latin American assets.
Finance Minister Henrique Meirelles said on Tuesday that Brazil could raise taxes or promote fresh spending cuts if necessary. He said there was no possibility of revising the 143.1 billion reais ($45.3 billion) primary deficit goal, which excludes interest payments.
Brazil last raised the IOF financial tax on the purchase of foreign currencies in cash in May to 1.1 percent.
($1 = 3.1579 reais)
(Reporting by Bruno Federowski; Editing by Richard Chang)