Weak Dollar Augurs Interventions

Governments Are Likely to Step Up Currency Maneuvers if Softness Persists

The dollar may have shown some strength last week, but most analysts expect its weakness to persist. That means the recent spate of government interventions in the currency markets likely will intensify.

Already, many countries have moved to arrest their currencies' rise against the dollar. The Brazilian government has imposed a 2% tax on foreign-investment inflows to tamp down the real, which has soared 31% against the dollar this year. Canada's central bank has said it could resort to buying dollars for the first time in more than a decade. Even the Bank of Japan could adopt similar measures.

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