Don Dion's Weekly ETF Blog Wrap

NEW YORK (TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next. Among his blogs this week were the following, in which he wrote about Brazil's efforts to keep its currency from rising, the continuing drama in currency ETFs, and opportunities in ETFs that track the Turkish economy.

Brazil ETFs Slugged by Foreign Investor Tax

Posted 10/20/2009 1:26 p.m. EDT

The Brazilian government doesn't appreciate the depreciation in the U.S. dollar. Today, it slapped a 2% tax on foreign purchases of fixed income and equities in order to slow the ascent of the Brazilian real.

Brazilian ETFs are taking it on the chin: MarketVectors Brazil Small Cap (BRF Quote) and iShares MSCI Brazil (EWZ Quote) are down 4.5% in midday trading, while WisdomTree Dreyfus Brazilian Real(BZF Quote) is lower by 2%.

As investors have already been punished, the question is whether further pain is ahead. In terms of this action, I do not believe it will have any effect on the real other than what we've seen already. These types of policy, in addition to currency intervention by a central bank, can affect markets in the short run, but markets overwhelm them in the long run.

The bigger issue is that the weak dollar is opposed by yet another country, with Brazil joining some Asian exporters, such as Taiwan. While people talk of replacing the U.S. dollar, the reality is that countries do not want to take the pain that comes along with dollar adjustment.

Whether you believe the dollar will be lower or higher, it will not move in a straight line, especially now that a sentiment shift will be supported by government intervention.