Brazil wants WTO to sanction countries that manipulate their currencies
Brazil’s delegate before the World Trade Organization said he was contacting other members of the organization so that sanctions are imposed on those countries which alter artificial money exchange rates that harm emerging countries, according to reports in the financial newspaper Valor Economico.
“There is a growing perception that money exchange markets distortions is a serious problem but we need to come up with a reply and so it happens many countries don’t like the idea of changes” and are obstructing the creation of instruments within the WTO said Ambassador Roberto Azevedo.
The ambassador made the statement during a meeting of top officials from the powerful industrial lobby, Federation of Industries from Sao Paulo, Fiesp, with academics that created the Observatory for Change at the Economics School from the Getulio Vargas foundation and who argued that the re-valuation of the Brazilian currency is now on its eighth year.
Azevedo said that the WTO has instruments to sanction disloyal trade practices but it needs a tool to help measure the money exchange rate imbalances and that countries harmed by such practices should be compensated since the “money exchange war” once temporary has become “structurally ingrained”.
With a massive inflow of foreign capital attracted by Brazil’s high interest rates and economic prospects as an exporter of much demanded commodities, the local currency has re-valued strongly during the last eight years with peaks of 1.55 Reais to the US dollar. This has had a devastating competitiveness impact for Brazil’s industrial sector and manufactured exports.
Brazil has insistently argued that “cheap money” plus zero or negative interest rates in developed countries has virtually flooded emerging economies with the inflow of capital causing serious cost and competition distortions.
Finance minister Guido Mantega calls the phenomenon the “currencies’ war” and has pointed its finger at the US, China, Korea and several other countries suffering from recession and intent in promoting exports (and surplus production) to the booming commodities-export emerging economies.
Fiesp head of International Relations Roberto Gianetti da Fonseca pointed out that the preferable exchange rate for the Brazilian currency is anywhere from 2.20 to 2.40 Reais to the US dollar.
“The current rate of 2 Reais to the dollar is insufficient: it only helped those factories with some breathing space, but they are not in a sound position. The ideal is for the US dollar to be in the range of 2.20 to 2.40 Reais”, said Gianetti da Fonseca.
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But the US Dollar floats freely in currency markets around the world, just like the Euro and the Pound Sterling, except that the Dollar goes to huge government treasuries and reserves to banks and companies, to millions of people who still save the good old green bills under their mattress, for fear of suffering dollar confiscations, as it is happening in Argentina today.
The US cannot manipulate its currency, it is the world´s reserve currency, the safe heaven where world investors flock by the millions looking for a safe spot to park their riches while they weather financial storms around the world. The US Dollar is in itself a force many times greater than the US economy and all the Federal Reserve can do is to continue the big party printing more and more.
3 months ago / today
1 USD = 0.906 / 0.9912 Swiss Francs
1 USD = 0.98 / 1.02 CND
1 USD = 0.954 / 0.975 AUD
1 USD = 0.48 / 0.491 FIM
1 USD = 1.88 / 2.04 BRL
Shows what kind of Burito idiot you are. What do you call? QE1, 2, operation twist..and let's not forget the LIBOR scandal (fixing interest rates, what is manipulating to keep their worthless derrivatives high in price, done by the BOE and Federal Reserve). If that isn't manipulating, proves my point why I always named you here an Idiot.
Manipulating the currency means to maintain it artificially undervalued or overvalued. Operation Twist is a way to avoid inflationary pressures by not having to print so many dollars. You yourself show how idiot you are every time you post. I don´t need to name you an idiot, we take that for granted already.
#6 Exactly
You continue to show your ignorance. RG pesos are traded at a fixed rate and the US dollar is traded on the open market by pure supply and demand like stocks.
You and Fido and others here may try to hide your envy for the fact that the US Dollar is and remains the reserve currency of the world.
You can blast US monetary policy, but your own central banks will continue to accumulate large amounts of dollars and will continue as regular clients of the Federal Reserve. Sorry boys, that´s they way things are now.
However it is doubtful that the WTO can act on the sayso of one country. Brazil needs to get politically savvy and pull some countries on side who have some clout. The USA would be a good place to start, however p!ssing them off like this, without any evidence probably isn't wise.
Brazil certainly did not build any support and clout from the mainstream world ecomonies with that stunt with Paragauy to allow Venezula in their ill effective club.
We have a tenuous relationship at best with Brazil and you are correct pissing us off only has us expecting a bigger favor for any help whatsoever.
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