By IANS/EFE,
Brasilia : The Brazilian government does not intend to directly intervene in the currency market, but will continue taking steps to stop the real from rising to a level that would make exports uncompetitive, Finance Minister Guido Mantega said Tuesday.
He commented in response to questions from a Senate committee about the finance ministry’s recent moves aimed at halting the rise of the real against the dollar.
“We believe in the floating exchange rate, but we can’t look like fools” in the face of exchange-rate manipulation by other countries, Mantega said.
While China has been keeping its currency artificially undervalued for 20 years, he said, “the problem became generalized to the extent that many other countries adopted expansionary monetary policies” in response to the global financial crisis.
He cited the US Federal Reserve and the European Central Bank for having “flooded the world with liquidity”.
“The Asian countries depend on their exports … and they are desperate to see where they can place their products,” leading to “a predatory competition”, the minister told Brazilian senators.
Brazil “is one of the targets of those countries and that brings a revaluation of the real, which leaves our prices higher in the international market and hurts the country’s competitiveness”, Mantega said.
The minister said the government’s recent increase in levies on some inflows of foreign capital has halted the rise of the real.
The value of Brazil’s currency has fallen from 1.70 to the dollar to 1.82 to the greenback over the past two weeks.
Curbing the appreciation of the currency is “now one of the main measures for defending” the Brazilian economy, Mantega said, warning that an exchange rate of 1.40 reais to the dollar would bankrupt Brazil’s manufacturing sector.