Brazil beating the currency wars drum as they fear an all out trade war
Brazil is getting ready to do some real damage to their economy by imposing capital constraints on capital. They are now seriously raising the currency wars battle flag. Expect some new capital controls or perhaps a raising of tariffs. They are already talking of a trade war, which in at time of economic malaise, is dangerous indeed. Via FT:
Guido Mantega, finance minister, told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, and would raise the issue of exchange-rate manipulation at the World Trade Organisation and other global bodies. He said the US and China were among the worst offenders.
“This is a currency war that is turning into a trade war,” Mr Mantega said in his first exclusive interview since Dilma Rousseff, Brazil’s new president, took office on January 1. His comments follow interventions in currency markets by Brazil, Chile and Peru last week and recent sharp rises in the Australian dollar, the Swiss franc and other currencies amid an exodus of investment from the sluggish economies of the US and Europe.