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Brazil’s Real Rises Following Tax Reform

Brazil’s real surged on Friday after the country’s newly-introduced tax reform bill was passed by the lower house of parliament on Friday. The currency was also boosted by a weakening dollar following the latest U.S. jobs report.

The real advanced by 1.1%, thereby driving a 0.6% jump for the MSCI index for Latam currencies. This rise comes as the tax reform bill is set to be introduced to the Senate for further voting.

“The approval of a long-awaited tax reform bill by Brazil’s lower house of congress suggests that hopes for growth-friendly reforms during Lula’s term aren’t dead,” Kimberley Sperrfechter, emerging markets economist at Capital Economics, observed.

Part of President Luiz Inacio Lula da Silva’s plan to boost Brazil’s economic growth, the reforms are aimed at simplifying the nation’s complex consumption tax laws.

Despite its recent uptick, the real is still headed for a weekly loss of 1.6%; its largest downfall in the last 11 weeks.

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