The Group of 20 nations declared there would be no 'currency war' and deferred plans to set new debt-cutting targets in an indication of concern about the fragile state of the world economy.
Brazil threatened on Friday a further clampdown on speculative foreign capital, firing a warning shot in the currency war Finance minister Guido Mantega blames on money-printing by Western central banks.
Brazilian President Dilma Rousseff slammed rich nations on Thursday for unleashing a tsunami of cheap money that was cannibalizing poorer countries such as her own, forcing them to act to protect struggling local industries.
Brazil’s central bank changed currency market rules to curb bets that the Real will appreciate against the dollar, according to an e-mailed statement. Brazil will require that banks make non-interest bearing deposits with the central bank equivalent to 60% of their short dollar positions exceeding 1 billion US dollars, the bank said.
If recent evidence is anything to go by, Brazil’s latest effort to stem the rise in the Real is unlikely to have a lasting impact on the markets, according to Capital Economics.
The G20 have reached a deal on indicators to detect economic imbalances, the French presidency said, after the meeting ended in Paris. The world's leading economies agreed on a compromise after frank, sometimes tense negotiations, French Finance Minister Christine Lagarde said.
The European Union Trade Commissioner Karen De Gucht anticipates a full trade agreement with Mercosur will be reached in a “short time” given the negotiations “unusual” speed but also cautioned about new challenges such as currencies over or under appreciation.