(Adds denial from finance minister)
By Bruno Federowski
SAO PAULO, March 8 Brazil's central bank and
finance minister denied on Wednesday a report that the
government could raise taxes on foreign exchange transactions to
help reach this year's fiscal target.
Bloomberg News had reported the move was "among the options
being considered" by the Brazilian government to meet its fiscal
target, citing a source with direct knowledge of the issue.
Asked about the report, Finance Minister Henrique Meirelles
said the government was not considering changes to the so-called
IOF tax on foreign currency transactions. A spokesman for the
central bank also denied the report.
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 1.4 percent, in line with other
emerging market currencies such as the Colombian peso.
Strong U.S. jobs data on Wednesday strengthened bets on a
Federal Reserve interest rate increase next week, threatening to
lure capital away from higher yielding Latin American assets.
Meirelles said on Tuesday that Brazil could raise taxes or
further cut spending if necessary. He said there was no chance
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 = 3.16 reais)
(Reporting by Bruno Federowski; Additional reporting by Marcela
Ayres in Brasilia; Editing by Richard Chang and Andrew Hay)