Your answer to question must be based on the text below entitled "Brazil boosts the dollar".Brazil boosts the dollar
How long can the run on the dollar continue? Last year's dollar
slump, with its attendant rise in commodity prices, ended when the
market put paid to it. This time governments are attempting to slow it
down. But it is not, as widely expected, the US government that is doing
this. Instead, the Canadian dollar dropped sharply on Tuesday after the
Bank of Canada issued a warning over the currency's recent strength.
Brazil's government went further, imposing capital controls to stop the
real gaining at the dollar's expense. Other countries, it appears, have
more to lose from a weak dollar than the US does.
Perhaps as a result, there was a day's pause in the trade that has seen
the dollar hit 14-month lows while oil, denominated in dollars, briefly
hit $80 a barrel before falling. Brazil's imposition of a 2 per cent tax
on capital inflows, to both stocks and bonds, showed strong intent.
This move brought the real, which has risen 54.5 per cent against the
dollar since its nadir, down by 3.8 per cent. The Bovespa stock index,
which has tripled since its low, fell 7.5 per cent in dollar terms at
one point. Brazil evidently fears that an
overpriced real could endanger its recovery. Other exporters will be
(Source: the Financial Times October 20- www.ft.com, adapted)The result of the new Brazilian tax on investments was
a) a rise of 54.5% in the value of the dollar.
b) a fall of 2% on the Brazilian stock market.
c) a drop of 7.5% in the dollar against the real.
d) an increase to $80 in the price of a barrel of oil.
e) a decrease of 3.8% in the value of the real.