By Stephen Eisenhammer, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – Brazil’s finance minister, Guido Mantega, reiterated his opinion Monday that the appreciating U.S. dollar will increase the competitiveness of Brazilian industry. Speaking at the finance ministry, Mantega said that the current exchange rate, just under US$1 to R$2, allowed local products to remain cheaper than imported goods subsequently boosting national production.
“The high dollar benefits the economy because it gives greater competitiveness to Brazilian products,” he said.
Mantega has been a fierce critic of U.S. and European monetary policy which has seen governments inject huge amounts of cash into their economies, resulting in both an undervalued currency and a flood of foreign investments to emerging economies.
The finance minister suggested that Brazil was engaged in a “currency war” with developed nations in order to achieve an competitive exchange rate.
President Dilma Rousseff decried this policy as resulting in a “tsunami of money” hitting Brazil, which has led to the overvaluation of the Real and a stalling of domestic “de-industrialization”.
However, Mantega denied that the government had played an active part in the beneficial exchange rate. “The government has never established parameters for the dollar and will not do so in the future,” he said.
In May 2011 the Brazilian real rose against the U.S. dollar to its highest point in recent years to R$1.55 to US$1.
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