Western countries are defending themselves from speculation and want to return to growth, but emerging countries are paying the price, especially Brazil. He complained about this in an interview with the Financial Times the Minister of Economy, Guido Mantega. THE'last bazooka launched by the Federal Reserve, which plans to inject $40 billion a month into the economy until employment recovers is, according to the minister, “protectionist” and will start a new “currency war” with disastrous consequences for the rest of the world. Also because in addition to the stimuli from the Fed, the European Central Bank has also taken a step towards monetary easing with the anti-spread plan presented by ECB president Mario Draghi. And the Bank of Japan followed closely, with a $64 billion package to avoid excessive appreciation of the yen.
These moves will not be without consequences in emerging countries as well. On the contrary, “there will be marginal benefits in the US because there is no need for liquidity”, argued Mantega. Cash, he adds, "is not going to increase production." According to the Brazilian minister, the third American quantitative easing is depreciating the dollar and boosting North American exports. Which for Brazil could lead to an increase in competitiveness. Alright then.
But what interests him is the fact that the already considerable slowdown in the Brazilian economy is worsening: so far, in fact, the only effect it has had is, according to Mantega, a change in expectations. "Risk aversion has fallen as the animal instinct of the markets has increased." From his point of view,"if a weaker dollar leads to increased competition in trade, it will also force Brazil to take steps to prevent the real from appreciating".
The weak dollar is also bad for Brazil because it means a weaker yuan, since the exchange rate of the Chinese currency is fixed to that of the US currency. According to Mantega, today the price of the real is "reasonable", but the currency is "still overvalued compared to a basket of currencies of the main commercial currencies of the country". And the minister does not spare himself the usual admonition that even President Dilma Rousseff underlines every time she visits the USA or Europe: “The United States, Europe and the United Kingdom are much more protectionist than Brazil”. In short, be careful, because this time in the global scenario the South American country will not give up easily.
Read theinterview with Minister Mantega in the Financial Times.
