Brazil's Finance Minister Warns of 'Trade War'
The world could face a full-scale "trade war" if governments keep pushing down exchange rates to boost exports, Brazil's Finance Minister Guido Mantega warned in an interview on Monday.
He also told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, whose continued strengthening threatens the country's export-led economy.
"This is a currency war that is turning into a trade war," Mantega told the paper.
The finance minister coined the term "currency war" in September, amid a spate of interventions by countries desperate to keep the value of their currencies down and boost the attractiveness of their exports.
He said Brazil would raise the issue of exchange-rate manipulation at the World Trade Organization and other global bodies, accusing China and the U.S. of being among the worst offenders.
"We have excellent trade relations with China... But there are some problems," Mantega was quoted as saying.
"Of course we would like to see a revaluation of the renminbi (Yuan)."
Brazil's trade with the U.S. had dropped from a large annual surplus in Brazil's favor to a large deficit due to loose monetary policy in the US in recent times, Mantega said.
His comments came after Brazil's central bank on Thursday took a surprise step aimed at stopping banks taking speculative short positions that the real will continue to rise against the dollar.
In Monday's interview, Mantega said more such moves were in the pipeline as pressure on the real was now coming from the futures market.
"You can expect more measures on the futures market," he said.
The strength of the real, which has more than doubled in value against the dollar over the past eight years, is a source of major concern in Brazil.
It is one of the first challenges faced by the new government of President Dilma Rousseff, who took over the reins of Latin America's biggest economy from Luiz Inacio Lula da Silva on January 1.