Monday, February 7, 2011

Geithner: Brazilian Real Overvalued Because Of China, Fails To Mention Low Rates In the U.S As Cause

At leats thast is what he implied during his visit to Brazil today. Mr. Geithner attributed Brazil's recent trade problems to countries "that understand the value of having an undervalued currency", seen as clear reference to China's yuan.

Seeks to work together against China
He said: "We have a common interest with Brazil and other emerging economies that growth is balanced,"
"Brazil and other emerging markets cannot address these challenges by their own policy choices alone," "It's now more important than ever that we work together."

New President Dilma Rousseff has identified China's undervalued yuan as one of the biggest threats to Brazil's economic boom due to a flood of cheap Chinese imports.
Ms. Rousseff is due to visit Beijing in April where she will raise the issue of the undervalued yuan, according to officials.

Geithner also said that countries such as Brazil that face an "out-sized burden" due to their strong currencies "may need to adopt carefully designed macroprudential measures"

Brazilian press comments not so flattering

However, Brazilian press wrote that Mr.Geithner did not commnet on the ultra-low interest rate policy and cheap money and stimulus that the U.S. has. That is clearly another reason for monety to seek other countries.

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