Tom Murphy & Luciana Magalhaes – WSJ, 02/24/2012
A global “currency war” will intensify this year as the world economy slows, Brazilian Finance Minister Guido Mantega said, adding that Brazil is “well prepared” to defend its currency against unwanted appreciation.
“Global economic growth in 2012 will be below that of 2011,” Mr. Mantega said ahead of his participation at a meeting of finance and monetary officials from the Group of 20 nations this weekend in Mexico City. “One of the results of the slowdown is that the global currency war is intensifying.”
As developed economies have aggressively eased monetary policies in a bid to revive their sputtering economies, their currencies have weakened. That, in turn, has made their exports more competitive and has prompted investors to move money into higher-yielding assets—in many cases in emerging markets such as Brazil, where economic growth and base interest rates are considerably higher.
