Brazil Accuses China and the U.S. of Manipulating the Currency

On Thursday in Paris The Brazilian Finance Minister Guido Mantega accused China of manipulating its currency and also criticized the U.S. for its policy of weak dollar.

“Of course, China is manipulating its currency.” said the Minister in English to the press at a forum in Paris. He also criticized U.S. monetary policy, considering that the dollar was undervalued at present.

Mr. Mantega qualified his remarks by saying: “I do not know if it is just a manipulation.” This is the “quantitative easing that leads to an undervaluation of the dollar,” he said.

He was referring to the policy of monetary quantitative easing adopted last November by the U.S. Federal Reserve (FED) which aimed to ensure that interest rates in the medium and long term are as low as possible to stimulate the economy.

Asked about the measures taken by his government to prevent the Real being overvalued, Mr. Mantegna said, “we always act against the overvaluation of the real, but I can not detail them, as it is of a surprise.”

Since 1999, when Brazil began its fluctuating exchange rate policy, the real had never reached such heights. On Wednesday, the real closed at 1.5685 to the dollar.

Mr. Mantega, however, admitted that the situation of the manufacturing sector worried. “This sector continues to grow, but it has difficulties to compete in foreign markets,” he said.

In recent years, China has become the largest trading partner of the powerful Brazilian economy that attracts 60% of Chinese investment in Latin America, supplanting the United States.