South America will go all out to lower their currencies, commodity producer South Africa will do the same; leaving Australia squeezed, until the Reserve Bank of Australia starts selling US Treasuries.
Brazil fires another shot from WSJ:
" SAO PAULO (Dow Jones)--Brazilian stocks opened sharply lower Tuesday as investors turned jittery in the face of new taxes on fixed-income inflows from overseas.
Brazil's benchmark Ibovespa stocks index opened 1.5% lower at 70,645 points.
Monday night, after markets closed, the Brazilian government announced new IOF financial operations tax rates for overseas fixed-income flows and margin deposits on futures positions. The IOF on fixed-income inflows rose to 6% from 4% while the rate on margin deposits rose to 6% from 0.38%.
The new taxes do not directly affect overseas investments in stocks. However, according to traders, new taxes on any form of foreign investment leave investors worried about the specter of government interference in the market.
Traders also rejected the notion that some foreign investors might switch from fixed-income to stocks in the Brazilian market. "No so," said one trader, who wished not to be named. "These are two different kinds of investments attracting two different kinds of investors."
In a research note for clients, BBH strategist Win Thin wrote, "Brazil is trying to limit short-term investments." The aim is "to find the right combination of policies to curb excessive BRL [currency] appreciation."
The Brazilian real has appreciated more than 30% since early 2009. The strong Brazilian currency hurts exports.
Other factors Tuesday were also hurting Brazilian stocks, traders said.
Lower international commodities prices mean falling revenues for Brazilian exporters.
Meanwhile, worries over government tax policy may also be an excuse for some profit taking by domestic funds, traders said. The Ibovespa index has gained more than 5% in the last month.
Blue chips were mostly lower in early trading Tuesday.
Mining major Vale (VALE, VALE5.BR) fell 1.04% to 48.60 Brazilian reals ($28.93) on lower global metals prices.
State-controlled energy giant Petrobras (PBR, PETR4.BR) fell 1.44% to BRL26.03.
Telecom leader Tele Norte Leste SA (TNE, TNLP4.BR), or Oi, declined 1.25% to BRL25.18.
Flat-steel maker Usinas Siderurgicas de Minas Gerais (USIM5.BR), or Usiminas, fell 1.22% to BRL21.02.
Minas Gerais utility Cemig (CMIG4.BR) was down 2.24% to BRL29.19.
Aircraft manufacturer Empresa Brasileira de Aeronautica (ERJ, EMBR3.BR), or Embraer, was a rare winner, rising 0.61% to BRL11.48 after closing a deal Monday to sell private jets to U.S.-based NetJets."
Coming G20 will be a waste of time.
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