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Brazil boosts the dollarHow long can the run on the dollar continue? Lastyear's dollar slump, with its attendant rise in commodityprices, ended when the market put paid to it. This timegovernments are attempting to slow it down. But it is not,as widely expected, the US government that is doingthis. Instead, the Canadian dollar dropped sharply onTuesday after the Bank of Canada issued a warning overthe currency's recent strength. Brazil's government wentfurther, imposing capital controls to stop the real gainingat the dollar's expense. Other countries, it appears, havemore to lose from a weak dollar than the US does.Perhaps as a result, there was a day's pause in thetrade that has seen the dollar hit 14-month lows while oil,denominated in dollars, briefl y hit $80 a barrel before falling.Brazil's imposition of a 2 per cent tax on capital infl ows, toboth stocks and bonds, showed strong intent. This movebrought the real, which has risen 54.5per cent against thedollar since its nadir, down by 3.8 per cent. The Bovespastock index, which has tripled since its low, fell 7.5 per centin dollar terms at one point.Brazil evidently fears that an overpriced real could endangerits recovery. Other exporters will be watching closely.(Source: the Financial Times October 20- www.ft.com, adapted)
Compared to Canada, according to the text, Brazil
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