John Lyons and Matthew Cowley – The Wall Street Journal, 01/04/2011
Brazil’s overvalued currency may be turning the South American giant into a U.S. ally on a key economic issue: Pressuring China to let its own currency strengthen to address global trade imbalances.
Brazil’s newly appointed Trade Minister Fernando Pimentel said Monday that President Dilma Rousseff, who took office Jan. 1, intends to put Chinese currency weakness on the agenda when Ms. Rousseff travels to Beijing in April. U.S. officials have long accused China of keeping its currency, the yuan, artificially weak to gain an unfair advantage in international commerce.
Brazil has criticized governments that it claims manipulate their currencies, including knocking China over its weak yuan. Recently, Brazilian officials have directed their harshest comments at the U.S., which is printing dollars to lower long-term interest rates, while sparing China, an increasingly important export market for commodity-rich Brazil. But that may be changing.