Brazilian president-elect Dilma Rousseff admitted her administration would take all the necessary measures possible to prevent the Brazilian Real from increasing its value vis-à-vis the US dollar, according to reports from the Sao Paulo press that interviewed the successor of President Lula da Silva in the recent G-20 summit in Korea.
“It’s not good to arrive in Seoul with the title of the most overvalued currency among all the countries participating in the G-20” meeting Rousseff was quoted. She travelled to Seoul with the current Finance minister Guido Mantega the only member of the current cabinet so far confirmed.
Mantega although an orthodox is also known to be more in line with “a national development” focus, preferred by Ms Rousseff, which differs from the ultra orthodox Central Bank president Henrique Meirelles who is praised for having kept inflation under control with a most conservative monetary policy based on extremely high interest rates.
In Seoul and in spite of a very pleasant exchange with US President Barack Obama, the Brazilian president-elect was extremely critical of what she described as the “disguised devaluation” of the US dollar following on the latest Federal Reserve decision to further pump 600 billion US dollars to the economy.
“A weak dollar means the burden rests on the backs of other economies. But we don’t influence the Fed, so there’s not much to control misbalances and much less to be done by other sovereign governments”, said Rousseff who nevertheless admitted that China did what was needed, “it kept the Yuan is strict relation with the US dollar”.
When asked how her administration would react to preserve Brazil from the impact of the devalued US dollar she replied “there are certain measures that are not even confessed to your-self”.
This somehow presents a different focus from the current scenario in Brazil and could mean changes as of January first 2011 when Ms Rousseff takes office. The less orthodox and more “national development” prone Mantega will be in the spotlight while with President Lula da Silva the stage was fully occupied by the Central bank’s ultra-orthodox president Meirelles.
With the Brazilian press President Lula da Silva tried to diffuse the apparent differences arguing that the exchange rate is flexible, which means it can “go up or go down”, and what really matters to his administration is not a devaluation of the Real but rather that the United States repositions the US dollar higher.