Brazil will continue to intervene in support of industry and depressing its currency

Saturday, April 21st 2012 - 03:51 UTC

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Brazilian Finance minister Guido Mantega said on Friday that IMF Managing Director Christine Lagarde makes a mistake in recommending emerging countries not to intervene in the money exchange markets to counter the strong devaluation of currencies from the rich countries. Read full article

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ChrisR
This tactic is known as 'The Race To The Bottom'. It is going to end in tears for Brasil who will end up with a reputation for destroying the monetary value of ivestors interests.

If Brasil really wants to be 'in the big league' it need to carefully consider what the International Market thinks of it.

Brasil may well be at the crossroads of going forward (visits by the President to the USA, and everywhere else) or starting the long march back to where it was.

So far they have done very well in a bouyant market: now the real test of the President commences. And it has wrong footed itself with this protectionist measure.
Apr 21st, 2012 - 12:03 pm - Link - Report abuse 0
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The Chilean perspective
Brazil's protectionist economy is probably the worlds only really successful protectionist model. It is the worlds 6th and soon will reach 5th. Asides from a very overvalued currency, it has very good long term prospects. Their agricultural sector is superb and their industrial sector doesn't really suffer from what usually affects protectionist models, such as inefficient industries and crappy products. Their current account and budgetary positions are good also. In fact I support the Brazilian central banks aggressive monetary policy and I hope they continue to buy dollars and lower their interest rates until the Real reaches a competitive value and growth returns to capacity.
A huge contrast to the Argentine model of protectionism. I wish the Brazilians well.
Apr 22nd, 2012 - 07:12 am - Link - Report abuse 0
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tobias
@1

The race to the bottom is the capitalist way. Most efficiency at lowest cost. Now that Europe and the USA seem to have been dragged into it by the new global order of global capitalism, it seems you don't like the idea too much.

@2

Brazilian products are not that good. Their cars have a worse reputation than argie cars. They do have select industries that are excellent like petroleum, Embraer, and some others, but in general their products suffer from the same complacency of standards are other countries with closed industries.
Apr 22nd, 2012 - 08:33 pm - Link - Report abuse 0
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ChrisR
3 tobias

Never have agreed with it: it is the the desperate act of a panicked nation, mine (UK) included.

As a retired person with a lifetimes savings, zero interest rates, companies crashing every day and other problems, reduces my options considerably. Gold being the exception.
Apr 23rd, 2012 - 11:34 am - Link - Report abuse 0
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