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Message: Reason for dollar strength? Brazil trying to hold down real

Reason for dollar strength? Brazil trying to hold down real

posted on Jan 14, 2010 08:22AM

The following update from Evergreen's Prez today......reason for dollar's strength?

"I have to say that I'm impressed by the Brazilian Sovereign Wealth Fund's ability to move the real weaker... They've been in the markets buying dollars by the truck load, and pushing the real weaker... Hmmm... Think about this for a minute... The Gov't announces a Sovereign Wealth Fund that will buy dollars... And the BCB is probably about ready to raise rates, which would make the real more attractive... You don't think these two opposite pulling forces on the real were done as a package deal by the Gov't do you? Nah... That couldn't happen... NOT! I personally truly believe that the Gov't knew the economy was soaring and that they would have to raise interest rates aggressively at some time in the near future, so why not introduce a way to keep the real from soaring at the same time? Pretty darn smart on their part... But then, what happens with the Wealth Fund runs out of money? "

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