Still no sign of a ceasefire in Brazil's 'currency war'

If recent evidence is anything to go by, Brazil’s latest effort to stem the rise in the real is unlikely to have a lasting impact on the markets. While rising inflation should mean that the authorities become more tolerant of a stronger currency in the short term, the fundamental driver of the real’s strength – namely rapid capital inflows – is unlikely to dissipate soon. Brazil’s ‘currency war’ looks set to rumble on.

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