Real Sinks as Brazil Taxes Remittances to Shore Up Budget

Brazil’s currency sold off Thursday as the government announced higher taxes on financial transactions along with a widely anticipated plan to shore up its deteriorating finances.

The finance ministry led by Fernando Haddad estimated that the government will obtain 20 billion reais ($3.5 billion) in 2025 and 41 billion reais in 2026 by increasing the tax locally known as IOF on a series of financial transactions. In particular, investors were negatively surprised by a 3.5% levy imposed on foreign currency purchases, remittances and transfers made by offshore funds.