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.

Finance minister Guido Mantega said the appreciating dollar will support Brazilian industry, Rio de Janeiro, Brazil News
Finance minister Guido Mantega said the appreciating dollar will support Brazilian industry, photo by Fábio Rodrigues Pozzebom/ABr.

“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.

Read more (in Portuguese).

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4 COMMENTS

  1. “allowed local products to remain cheaper than imported goods subsequently boosting national production.”

    I’m sorry have you bought anything at a store recently? Try buying an iPad (now made here yet still the same price as before) or a craft beer (as expensive or even more expensive than imported beer yet no where near as good)

  2. The government has this very distorted notion that these measures of demotivating importation will take prices down, and make our products more competitive against imported goods. Too bad they’re not researching this inexhaustibly. Had they done so they’d know that prices are as high as ever.

  3. The point of letting the dollar float is exactly to make imports more expensive, which will never result in lower prices here, as the inefficient producers here will proceed to gouge consumers even more than they did before. The only real benefit here goes to those who export goods and services, who will now get a lot more buck for their bang.

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