James Mackintosh

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