Brazil’s Finance Minister Guido Mantega said he’s not considering additional currency measures even as the U.S. throws “money from a helicopter” in a bid to boost economic growth.
Mantega said the Federal Reserve’s decision yesterday to inject $600 billion into the economy through debt purchases won’t work and increases the risk of asset bubbles forming around the globe. He said President Luiz Inacio Lula da Silva will urge the U.S. to change its policy next week when he attends the Group of 20 nations summit in Seoul, South Korea.
“It doesn’t work to throw money from a helicopter because this won’t make growth flourish,” Mantega told reporters in Brasilia. “In Brazil, there is no risk of bubbles because we took measures that block exaggerated inflows.”
While the U.S. debt-buying will weaken the dollar, Brazil isn’t considering any new measures to control currency gains.
“In Brazil we are managing to control the appreciation of the real,” Mantega said. “But this is a problem that may get worse as the U.S. persists with its policy.”
Brazil tripled last month a tax foreigners must pay to invest in Brazil’s fixed-income securities in a bid to ease capital inflows that helped drive the currency to a two-year high. The government also slapped a 6 percent tax on foreigners entering the country’s derivatives market.
The real gained 0.62 percent to 1.6794 per U.S. dollar at 11:57 a.m. New York time. The currency has more than doubled in value against the U.S. dollar since Lula took office in January 2003, making it the best performer among the 16 most-traded currencies tracked by Bloomberg.
Mantega said a decision by Congress to boost the 2011 federal revenue forecast is “worrisome” because it will lead to an increase of planned spending of about 20 billion reais ($11.9 billion) next year.
“We don’t have conditions for that,” Mantega said. “This is a moment to cut spending.”