THIS WEEK THE FEDERAL RESERVE announced the decision to reduce long-term interest rates by further loosening of monetary policy through "Operation Twist". This "Quantitative Easing", also known as surreptitious deficit financing, scheme should further weaken the US Dollar.
For our clients engaged in Brazil, the government had to intervene to hold up the Real. Brazil will continue to implement anti-dumping duties on select imports and increase taxes on foreign-built automobiles. This apparent "protectionism" policy is directly related to other countries' holding down their currencies. Last year, Brazil had imposed such schemes to reign in the rapid rise of the Real; this week, the scheme is to hold the Real.