Wednesday, September 15, 2010

US, Europe, and Asia All Want Their Currencies Devalued: Brazilian Real Touches All-Time High, Central Bank to Intervene

(please click to enlarge, note the buy/sell alerts on BZF)

The Brazilian finance minister has it right: The U.S. Europe and Aisan countries all want to devalue their currencies.

This is all getting too interesting. The Brazilian Real, touched an all-time high yesterday as well. BZF, is the ETF (click to receive buy/sell alerts).

BZF trades at $28.50. The in-the money October 30 puts trade at $1.60. 25 puts trade at $0.10.

Guido Mantega, Brazil's Finance Minister, gave emphatic statements about the exchange rate movements that are occurring in the world market in recent days. He made direct mention of the intervention by Japan's central bank in its currency yesterday, saying that "there is a predisposition to keep Asian currencies devalued."

The minister made the point that Brazil will not allow the Real to be valued excessively. "We're aware of it and we will not allow this to happen," he said.

He evaluates the event of a devaluation of other currencies in the world against the Real, Brazil could lose out on international trade in its business from exports. The minister also commented that this movement was not only noticed in Asian countries. "The United States and European Union want the same thing (to devalue their currencies). It is part of their strategy to end the crisis," he said. "We will not be watching this game. We will take appropriate measures so that the Real is not [over]valued," he said.

The minister also said that an increase of at least 7% of GDP now is "guaranteed" for this year. "We give the lowest growth of 7% of GDP this year, this is the minimum that we will grow in 2010," the minister said. According to him, Brazil is at the forefront of global growth, second only to China, and for the next four years will present an annual average growth of 5.8% of GDP. Mantega also said that the country will experience later this year, "one of the best Christmases we've seen,".

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1 comment:

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