Wed, Jun 26, 2013 - Page 15 News List

BRICS seeking to limit US stimulus withdrawal impact


Major emerging-market nations will work together to limit the effects that a strong US dollar could have on their economies as the US Federal Reserve signals plans to scale back its massive stimulus program, the Brazilian government said on Monday. Brazilian President Dilma Rousseff and her Chinese counterpart, Xi Jinping (習近平), discussed ways to strengthen policy coordination on Monday in a telephone conversation, said Thomas Traumann, spokesman for the Brazilian government.

Rousseff will contact other leaders of the BRICS group, which also includes Russia, India and South Africa, later this week to discuss concrete measures.

“The BRICS will decide on coordinated action related to the global appreciation of the US dollar at a meeting in July in Russia,” Traumann said without elaborating.

Brazil and other developing nations are growing anxious about the expected withdrawal of stimulus in the US, which has sparked a sell-off in local markets.

In his conversation with Rousseff, Xi stressed that “new and complex” developments in the global markets called for closer coordination among the BRICS, a Brazil-based diplomat said.

“There is a consensus that the BRICS need to strengthen communication and coordination at a time when we have more complex and new factors affecting global markets,” said the official, who was briefed on the presidents’ discussion.

The official, who asked for anonymity, gave no specifics.

Expectations that the US Federal Reserve will scale back its bond-buying program has dragged the Brazilian real to four-year lows, prompting the government to remove capital controls in a bid to bring more dollars into the economy. Brazilian stocks have also plummeted to more than four-year lows.

The sharp depreciation of the real has raised worries about the risk to local companies with large debt in US dollars. A weaker currency could also stoke already-high inflation in Brazil.

Only a few months ago, Brazil and other emerging market economies blamed the ultra-loose monetary policy of developed nations for pushing up the value of their currencies and making their exports less competitive.

This story has been viewed 1976 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top