The currency wars are under way again and Brazilian Finance Minister Guido Mantega, who coined the term, is miffed.
Mr Mantega is worried that QE3 will do what QE2 did and lead to an “avalanche” of dollars hitting emerging markets, driving up prices and currencies, helping US exports and creating troubling inflation. If it prompts the Brazilian Real to strengthen, he warned of action – although he did not say what the Brazilians might do this time:
This is going to force the Brazilian government to adopt additional measures to prevent the Real being overvalued.
Brazil imposed a series of taxes and restrictions on foreign inflows over the past three years in an effort to stop speculative cash pushing up the currency, but relaxed many of them after the renewed eurozone crisis led the Real to plunge.
Still, it isn’t obvious that Brazil is losing the currency war, as these charts show: Read more
James Mackintosh is the Financial Times' Investment Editor, writing and presenting the daily Short View column and video. In 16 years at the FT his posts have included comment editor, motor industry editor and hedge funds correspondent, as well as spells in the Parliamentary lobby and Paris. He was the first reporter hired for FT.com, joining two weeks before it launched.
John Authers is the Financial Times' Senior Investment Columnist, writing the Saturday Long View and a regular Monday column. In a 22-year career at the FT, his previous posts have included global head of the Lex column, investment editor, US markets editor, Mexico City bureau chief and US banking correspondent. His latest book is The Fearful Rise of Markets. 