Investors in Brazil have continued to adjust their currency bets, weakening the Brazilian currency markets even further on August 11, reports The Wall Street Journal. The investors are largely responding to recent tax changes to derivatives positions.

In July, after the real reached its strongest levels in 12 years against the U.S. dollar, the Brazilian government established new tax rules for the currency-derivatives market. As a result, Brazilian manufacturers have had to compete with an increase in low-cost imports. Local exporters have had to contend within competitive international markets, the news source reports.

By the end of the month, these new taxes on short-dollar positions will make their full effect felt.

Trader Cesar Roberto dos Santos, from brokerage house Previbank, said, "The currency is moving in accordance with the external scenario and the new tax regime in the futures market." He added, "I think that the measures tapped the brakes on the real's appreciation. But after the market adjusts, the real will strengthen again."

As a result, the Brazilian Central Bank reports that financial institutions and banks have been shaping their short-dollar bets, resulting in a drop in short-dollar positions on the future markets – from last Friday's $18.4 billion to Thursday's $15.1 billion overall.

According to a Reuters report, economists have been scrambling to revise their predictions for Brazilian interest rates as the market's turmoil has heightened. Cuts in the Selic have even been predicted, though this would be an extreme negative scenario.