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Brazil says it won't let U.S. 'melt the dollar'
By Robin Yapp
The Telegraph, London
Wednesday, January 5, 2011
http://www.telegraph.co.uk/finance/currency/8241635/Brazil-pledges-to-st...
SAO PAULO, Brazil -- Brazil has sounded a new note of warning in the international "currency war" by pledging not to allow the United States to "melt the dollar."
Guido Mantega, the Brazilian finance minister, raised the prospect of introducing greater controls on short-term flows of speculative capital into his country.
The Brazilian real has risen more than 35 percent against the dollar since early 2009, leading some economists to label it the most overvalued currency in the world.
There is widespread concern about the effects of a weaker dollar on the competitiveness of emerging markets, many of which have seen foreign investment send their currencies soaring.
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"We're not going to allow our American friends to melt the dollar," said Mr Mantega, who views the US government's move to pump $600 billion into its economy as an unfair attempt to help exports
"There are infinite measures that we can take. One of them is to manage the entry of speculative capital in the short-term."
His comments came after Chile's central bank announced a plan to buy $12 billion on international markets on Monday in an attempt to stem its own currency appreciation.
The Chilean peso has gained by more than 17 percent against the US dollar since June, fuelled by increases in the price of copper, which is Chile's biggest export.
It was Mr Mantega who coined the term "currency war" last year as he voiced concerns that Brazilian exports were being damaged. In October he tripled the tax on foreign investments in some bonds to 6 percent, a measure he said had since been "effective."
Brazil plans to make "considerable" cuts in government spending, which would help weaken the real and allow interest rates to be cut at some point from the current level of 10.75 percent.
The "currency war" has been of particular concern to Brazilian manufacturing companies, which have suffered due to booming demand for cheap imports from China, which has been accused of keeping its currency artificially weak.
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Prophecy Drills 71.17 Metres of 0.52 percent NiEq
(0.310 percent Nickel 0.466 g/t PGMs +Au and 0.223 percent copper)
from surface at Wellgreen Project in the Yukon
Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit:
http://prophecyresource.com/news_2010_nov29.php
