FX Wars Escalate: Brazil Cancels Participation In Upcoming G20 Meeting

Tyler Durden's picture

The latest currency war escalation does not come from any of the usual suspects (the Fed-PBoC-BOJ-ECB-SNB hate pentagongram) but from non-axis player Brazil. And it's a doozy - the country's top economic officials have decided to cancel their trip to Seoul in what is likely the first jarring demonstrating of defection from the G-20 cartel. The reason for this last minute defection from the Central Banking proletariat , as given by Finance Minister Guido Mantega and cited by Reuters, is, appropriately enough: "currency issues." Nuff said. And while Mantega has decided to pay a last minute cancellation fee, he is not alone - the president of the central bank Henrique Meirelles has also withdrawn from the list of attendees, due the totally unforeseeable event of monetary policy meetings to be held on Tuesday and Wednesday. Obviously those were unheard of when the G-20 was scheduling the time and date of its location. Next up on defection watch: Hildebrand and Shirakawa. It will go oddly elegant in addition to the (FX) suicide watch they have been on for about a week.

From Reuters:

Brazil's top economic officials will not be attending meetings of Group of 20 finance ministers and central bank governors in South Korea this week, the finance ministry and central bank press offices said on Monday.

Finance Minister Guido Mantega canceled his trip because of currency issues, the press office confirmed, adding that he had just come back from an international trip and would be accompanying President Luiz Inacio Lula da Silva to the Group of 20 leaders meeting next month.

Reuters reported on Friday that Mantega would not be attending the meeting and would unveil new currency measures aimed at containing a rapid rise in the real BRBY this week. For more see [ID:nN15261854].

Central Bank President Henrique Meirelles will also not be attending the G20 this week because the bank holds its monetary policy meeting on Tuesday and Wednesday, the press office of the central bank said.

Latin America's largest economy has sought to project itself onto the international stage in recent years, and the G20 has been an important forum for its increasing clout as a major emerging market.

Brazil also holds presidential run-off elections on Oct. 31.

And just in case there was any confusion what the real reason for the last minute no show is, we also learn from Reuters that in an attempt to prevent the ongoing surge of the real, Brazil has raised the tax it charges foreigners on local purchases from 4% to 6%.

Brazil will raise the tax it charges foriegners to buy local bonds to 6 percent from 4 percent currently, Finance Minister Guido Mantega said on Monday.

The move is aimed to help curb a recent rally by the local currency, the real BRBY.

In other news, Brazil did not buy dollars today. We are not so sure about Peru or the other 20 countries which are now engaged in FX crossfire.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
99er's picture


(Reuters) - Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage, saying no country could weaken its currency to gain economic health.

"It is not going to happen in this country." Geithner told Silicon Valley business leaders of devaluing the dollar.


LostWages's picture

Timmy was drunk and he lied, so it doesn't count.

Now Benny is singing a different tune. 

99 billion bucks on the wall,

99 billion bucks...

take 1 down and pass it around....

98 billion bucks on the wall...

Caviar Emptor's picture

Read My Lips: No New Fiatscos! :)

StychoKiller's picture

Currency issues?  Translation:  Visa declined the airline ticket charge!

cswjr's picture

Lol, hate pentagram.  Love it.


Caviar Emptor's picture

I was wondering when you'd pick this up, TD! 

The Lilliputians are tying Gulliver down. They understand that Fed policy is wrong for the global economy and will ultimately hurt everyone. 

tom a taxpayer's picture

Quote of the Day: "The Lilliputians are tying Gulliver down."

I wonder if the Lilliputians will have a Modest Proposal.

perchprism's picture


The town of Lilliput is on fire, and Gulliver is going to break his shackles and piss all over it to douse the flames.

Oh regional Indian's picture

While I'm sure India will suck up and show up, all is not well on the currency front here either. The Rupee has been on a "tear" these past 4 weeks or so.

Largest middle class employers (IT) are all Dollar/Euro dependent.

So the rupee is strengthening, exporters are crying "Uncle" and this is just the beginning of FX wars.

Capital/border controls anyone?




trav7777's picture

Who gives a shit??


It's either the fuckin bitch ass world ACCEPTS the collapse of the US consumer and accedes to a normalization of trade flows or they FUCK OFF. 

We CANNOT repay the debts, do they fucking GET THIS?  We also CANNOT continue to suffer their mercantilist ponzi currency bullshit.  If we CANNOT repay the debts, it is sure as shit not time to rack up more.  The entire EM world is developing on the back of debt they bitch about our not paying but they bitch even worse if we won't borrow it.

If we STOP the debts, their stupid debtbubble economies collapse.  If we debase, they whine about that too.  The world is full of bitches.

The specific INTENT of the mercantilist ponzis of Japan and China was to take our production capacity.  Ok, DONE.  Now what?  We can no longer produce enough to pay for the goddamned goods and neither of these two stupid idiot nations wishes to let US actually sell anything in THEIR markets.

Brazil, China, India, ALL REFUSE to allow trade flows to normalize.  So, screw the whole lot of them.

Pollix's picture

Gotta give it to you, it's a cluster f**k all the way around.

purple's picture

more insight here than a hundred PhD economist pontifications.

tim73's picture

Typical American, blaming others for the mess USA is in. American business leaders themselves outsourced their own industrial base to boost the bottom line, for short term at least.

To boost that bottom line, they kicked in the teeth American blue collar workers in any way possible and thus, allowed imports to skyrocket, thanks to the outsourced factories.

3rd world said thank you for the opportunity and now they are ready to make their move, 15 years later. USA is not that important even for China. T-bond holdings of China has actually gone down by 100 billion dollars during last year.

USA is just another has-been drunken ex-superstar, suffering from delusions of grandeur. You guys just fucked up your own game.

Clancy's picture

Japan and China were playing for keeps and ended up with all the marbles.  Who let them do that?

The problem is that in the United States it's racist, intolerant and unfair to say that we have a collective interest or that we should work together to protect what's ours.  People still think we'll be rich and strong forever and no one can ever take it away from us.  So it's only fair to the disadvantaged people of the world that we continue to give everything away.

Well guess what happened.  The Chinese (I live in China, I get this regularly) are no longer in awe of us.  They're pretty contemptuous of us in fact.  They know they've won, and they know they beat us fair and square.

SwapThis's picture

They haven't won until they can rule without facism, which they cannot do yet.  They are standing on the backs of a slave class and will have to find 'boogie men' in the world to focus public attention on to survive as a political system.  China has never proved they can provide an environment that fosters long term stability.  Without big changes, popular unrest is still assured.  When they lose the US and EU consumer markets over the next few years, we will see what they have 'won'.  My guess is a huge, pitchfork toting mob.

Snidley Whipsnae's picture

The US is turning to facism to rule and our citizens are in debt up to their eye balls. China has avoided turning their citizens into debt slaves, even if they are slaves to the CCP.

Define 'long term stability'. China has been around for thousands of years, allbeit under various forms of government. The US government has been around less than 250 years and is looking very shaky now.

Without big changes in the US popular unrest is assured. Fixed that for you.

The US and EU consumer market middle class is dying as you make a prediction that China will 'miss these consumers'. Hey, China will develop trade with other countries that are more economically stable than the US and EU.

China is negotiating trade with various countries using their local currencies. They don't need no stinkin dollars and as time goes by fewer coutries will have use for dollars.

Once QE runs it's ruinous course to save the elite, Western economies will be a smoking pile of crap. Why would China want to continue trade with countries that issue trillions of funny money? China's internal consumption will increase in time and China will continue to develop trade relations with commodity rich countries...not countries that have squat to offer...save monopoly money.

dark pools of soros's picture

therein lies the linchpin.. and why we killed Saddam.  Oil must be paid in dollars!! or that whole $$ as global reserves goes up in smoke


so alternative energy actually kills the USA in a very ironic fashion as it leaves the boiling pot which is foreign oil dependency and falls right into the fire which is hyperinflation 

Dollar Bill Hiccup's picture

Bring it on home ...

Intel Corp. said it plans to invest between $6 billion and $8 billion on upgrading its manufacturing technology in U.S. facilities, including building a new plant in Oregon.

The upgrades are set as Intel looks to produce its next-generation 22-nanometer microprocessors in four existing factories in Arizona and Oregon, along with the new facility that is scheduled for research-and-development startup in 2013. The new chips will enable sleeker device designs, higher performance and longer battery life at lower costs, Intel said.

"These investments will create capacity for innovation we haven't yet imagined," said Brian Krzanich, the general manager of Intel's manufacturing and supply chain.

The company said the upgrades will result in 800 to 1,000 permanent high-tech jobs as well as 6,000 to 8,000 construction jobs. Intel employs about 83,000 people.

Last week, Intel said its third-quarter profit climbed 59% as increased corporate spending on new technology helped to ease pressure from weakened demand for personal computers.


MisterMousePotato's picture

Please ... can anyone explain to me why this comment is being junked? I mean, yes, certainly, the writer could have chosen less colorful metaphors to express his thought, but the thought itself appears to be one worthy of debate.

midtowng's picture

Without a BRIC country, does a G20 agreement even mean anything? Especially when China and the US are pointing fingers at each other. It's not like when the G7 controlled everything.

  The G20 meeting might be the biggest flop since the 1933 London Economic Conference.

Buck Johnson's picture

The rest of the world is starting to make their move.  They know what is happening in the US and they don't like it.  If they want a currency war, it looks like the other countries are going to do it also.

trav7777's picture

gawd, I am sick of hearing this blame US first crap on the dollar.

They HAVE been engaging in currency "war" for decades!  China and many other nations effect de facto or explicit PEGS to the damned dollar to ensure that their currency does not appreciate when it SHOULD due to trade imbalances.

The whining from all the BRICs except Russia is hypocritical and laughable in the extreme.

1100-TACTICAL-12's picture

I LUV ya trav, you are the quan...

Though I used to hate ya... You speek from the heart, which is rare.


Moonrajah's picture

The whining from all the BRICs except Russia is hypocritical and laughable in the extreme.


I don't know Trav. The Russian CB has recently went on record to state that it was cancellin it's 'currency corridor' (basically a level to which the CB tries to peg the RUR). It would mean there is to be more volatility expected. And all we're seeing is the RUR slowly devaluing even compared to the falling USD and EUR since then. 

So it was just a smart ploy to continue engaing in currency wars, while trying to look 'fair' to the West. Remember, Russia is a predominantly export-oriented Oil&GAS economy, and it stands to lose big time if the RUR appreciates. The Russian Goverment showed that it can't allow that with the rapid devaluation of the RUR in the end of 2008 (fuck the millions of citizens living hand-to-mouth, we have our own interests to take care of).

So I just don't know why single out Russia. They don't whine on the currency issue, true. But that doesn't mean they aren't doing (or ready to do) what their BRIC peers are. They are just keeping their cards to themselves, is all.

Clancy's picture

Uh huh, and why haven't we been waging war back?  Is that China's fault?

You liberals and your "systemic oppression".  Go back to revleft, hippie.

johngaltfla's picture

Sounds to me like the next step will be the REFUSAL to buy the crap paper we're shoving out throught the auctions. Maybe we'll just continue buying British crap if they buy our crap and then have the banksters execute secret swaps in Bermuda.


Spalding_Smailes's picture

October 18 2010

Brazil’s Real has added 1.2 percent since the tax increase was announced on Oct. 4, Brazil last week doubled a tax it charges foreigners on investment in fixed-income securities to 4 percent to curb appreciation in the real.

South Korea’s won strengthened 1.2 percent since Oct. 5, when regulators said they will start an audit of lenders handling foreign-currency derivatives on Oct. 19, through yesterday. The won today dropped 1.3 percent on concern the Bank of Korea will intervene to curb gains.

Indonesia’s central bank said on June 16 it will require investors in one-month bills to hold the securities for at least four weeks. The rupiah has appreciated 2.3 percent since then.

Thailand to Levy 15% Tax on Foreigners’ Bond Income


Caviar Emptor's picture

They're hanging out the 'No Monopoly Money' sign. 

They're no fools. There are just too many dollars at artificially high valuation. Inflation is sure to follow. 

Spalding_Smailes's picture

Just like the 30's first global beggar-thy-neighbor, second tariffs will be in order ... then?

Caviar Emptor's picture

Beggar thy neighbor as thou wouldst beggar thyself. One for the new age. 

If US devalues and hurts exporting countries, then such 'great American corporations' as Apple which make everything in Asia will also get hurt. 

Mercury's picture

The reason for this last minute defection from the Central Banking proletariat, as given by Finance Minister Guido Mantega and cited by Reuters, is, appropriately enough: "currency issues." Nuff said. And while Mantega has decided to pay a last minute cancellation fee, he is not alone - the president of the central bank Henrique Meirelles has also withdrawn from the list of attendees, due the totally unforeseeable event of monetary policy meetings to be held on Tuesday and Wednesday.

No reason to go all Dwight Shrute here, I'm sure this is easily explained by a rescheduled thong parade or something.

Atomizer's picture

What a shocker, others to follow suit.

Hero Protagonist's picture

Here is a visual representation of why Brazil will not be attending:


Atomizer's picture

Forming a NWO is more difficult than the policy makers thought.

Milton Friedman - The Robin Hood Myth


gwar5's picture

Here we go. Barriers to capital, tarriffs, retaliation -- currency wars. 

The unintended consequences of arrogance and self delusion is destruction.

Spalding_Smailes's picture

The usa is in total control ...

Tariffs will destroy China, will destroy manufactoring/ jobs market....China has been using tariffs for years blackmailing business to enter partnerships to be able to sell product into China.

Pay backs are a bitch, they can not afford high unemployment when they are trying to bring 300 million off the farms.See the pollution has destroyed tons of rivers ect and this has also destroyed tons of farming (no clean water for irrigation) so you have farmers with nothing to go back to the land is destroyed.

Clancy's picture

China isn't Japan, it doesn't depend on exports to survive.  China is completely self-sufficient in absolutely every regard and now owns most of the worlds money too.  They could build a wall around the whole country tomorrow and get along just fine.

Dollar Bill Hiccup's picture

Cultural Revolution v 2.0 ...


Mitchman's picture

Now, if only one of the other BRIC's would send their regrets even The Berbungler might begin to get the message.

prophet's picture

To help everyone prepare try this quiz.  Quiz is simple, quiz is fun, quiz is the game for everyone.

G-20 Flag Quiz


Sophist Economicus's picture

Looks like a spot just opened-up for a ZH delegation!

Turd Ferguson's picture

A couple of years back, when I first started mentioning to friends that the days of US World Reserve Currency status were numbered, I was laughed at and essentially called a heretic.

Just recently, when I suggested that, instead of 2020, the new global reserve currency would be unveiled as soon as 2015, I was dismissed as a lunatic and conspiracy theorist.

I now believe the timeframe may be even shorter. Events are spinning rapidly out of control. Even in a world where fiat are only indexed against each other, the US$ will, by this winter, make new all-time lows below 72 on the USDX. As debt and fiat base continue grow exponentially, the time horizon to global financial revolt shortens.

In the immortal words of Hans & Franz, hear me now and believe me later: Not only is the end of The Great Keynesian Experiment upon us, so is the end of US$ hegemony. The void will be filled by a partially asset backed, globally-recognized SDR. The United States, left with no options, will comply and participate. The US$, though still the currency of the "homeland", will necessarily cease to be the global unit of exchange. All of this by the end of 2013.


Green Leader's picture

What if the Iraqi Dinar becomes the *de facto* global reserve currency by 'chance' ?

This could happen soon...real soon.