Brazil’s finance minister has labled the current international conflict over currency valuation much more than simple political posturing.
Brazilian Finance Minister Guido Mantega, from the FT (emphasis ours):
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.
What’s happening right now is that every country wants to export their way out of the recession. That means, first devaluing your currency or asking a key trade partner to increase the value of theirs.
Next, states will resort to tariffs to protect key industries, and increase domestic demand for domestically produced products.
The question is, will we get the sort of crushing tariff, as unemployment remains high and populism rampant, that closes off the global economy and damages relations between states.