BRASILIA (Reuters) – Brazilian Finance Minister Fernando Haddad said on Monday the government has no plans to increase the financial transactions tax, known as IOF, to tackle the outflow of U.S. dollars after the sharp depreciation of the Brazilian currency last year.
“There is no discussion about changing the exchange rate regime in Brazil or raising taxes for this purpose,” Haddad told reporters.
He described the recent movements of the US dollar as part of “a natural adjustment process” due to tensions caused by both external and domestic factors.
The Brazilian real fell in value by more than 20% last year, making it one of the worst performing currencies in emerging markets.
The decline was driven by global strengthening of the US dollar following policy promises from newly elected President Donald Trump, coupled with a sharp rise in risk premia on Brazilian assets after the government unveiled a fiscal control package that disappointed investors.
After meeting with President Luiz Inacio Lula da Silva earlier on Monday, Haddad said discussions focused on planning for the year, with the priority being the approval of the 2025 budget proposal.
