The Brazilian real weakened further in early afternoon trading Monday after Brazil's government extended a 6% financial operations tax to overseas loans of up to five years.
The government ordered the extension of the tax before market hours Monday morning. Previously, the tax was charged on incoming loans of up to three years.
The extension of the IOF tax caused the real to weaken in the first minutes of trading to BRL1.7910 from Friday's close of BRL1.7820. As of 1640 GMT, the real had weakened to 1.8236 to the dollar.
The real continued to weaken throughout the session Monday as investors worried that Monday's order could be followed by additional government measures.
The IOF taxes, and other measures adopted by Brazil's government in recent months, have been designed to prevent any steep appreciation of the Brazilian real. Officials have said a strong local currency harms exporters and manufacturers.
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