US backs Brazil in currency war with China over yuan

 
City A.M. Reporter
THE US and Brazil will work together to pressure China on its undervalued
currency, US Treasury secretary Timothy Geithner indicated yesterday in comments that reinforced an emerging alliance between the Western Hemisphere’s two biggest economies.

In his one-day visit to Brazil, Geithner avoided mentioning China by name. Yet Geithner attributed some of Brazil’s recent trade problems to countries “that understand the value of having an undervalued currency” – a clear reference to China’s yuan -- and said that the US was committed to seeking a solution.

“We have a common interest with Brazil and other emerging economies that growth is balanced,” he said. “Brazil and other emerging markets cannot address these challenges by their own policy choices alone,” he added. “It’s now more important than ever that we work together.”

New Brazilian President Dilma Rousseff, who took office on 1 January, has identified China’s undervalued yuan as one of the biggest threats to Brazil’s economic boom.
Brazil’s economy grew seven per cent last year, but the pace of growth is expected to slow this year.