“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness."The FT adds,
The US dollar has fallen by about 25 per cent against the real since the beginning of last year, making the real the strongest performing currency in the world, according to Bloomberg.
He said central bank intervention was having little impact beyond reducing volatility in Brazil’s foreign exchange market. It resulted in making the real even more attractive for foreign investors, keen to make earnings on the spread between Brazilian government domestic debt, paying at least 10.75 per cent a year, and the cost of borrowing dollars internationally, currently about half a percentage point a year.
Mr Mantega recently said Brazil’s sovereign wealth fund was preparing to make “unlimited” dollar purchases to prevent the real appreciating any more.
Maybe, Mr. Bernanke should help by dumping some Reals, that's what what was learned from the 1930s, a policy of coordinated deprecation would be best. Of course that means the Chinese should depeg so the Yuan can fall too, or am I missing something?
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