Quick Edit | Blame it on Rio

Quick Edit | Blame it on Rio

A country known for the mesmerizing skills of its footballers suddenly finds its economic policymakers making some bizarre moves.

Brazil set the ball rolling a month ago when it imposed a tax on foreign capital flowing into its booming economy. The reason it did so was that this flood of foreign money was making the Brazilian currency expensive and its exports uncompetitive in the global markets.

This tax on capital inflows soon became a talking point across the world. Some feel the Reserve Bank of India should use the same tactic.

Brazilian companies found the obvious loophole: issue American depository receipts (ADRs) to global investors and then allow them to convert these into local shares traded in Rio de Janeiro.

This loophole has now been plugged by another tax, on ADR issuance. We will not be surprised if companies find more loopholes and the authorities try to plug them.

So, is this a bicycle kick that Pele would have been proud of or merely a spectacular self-goal?