By Jamie McGeever and Eduardo Simões
SAO PAULO (Reuters) – U.S. President Donald Trump is making a “very serious mistake” in accusing Brazil of deliberately pushing down the value of its currency, the real, Brazil’s Economy Minister Paulo Guedes told news website O Antagonista.
Earlier on Wednesday, President Jair Bolsonaro had also denied that the real is being artificially weakened against the U.S. dollar, in the wake of Trump’s surprise decision this week to impose tariffs on Brazilian steel and aluminum imports.
Bolsonaro, who has styled himself as a close ally of Trump, said he is “not disappointed” with the U.S. President yet, because the proposed tariffs have not become effective.
Guedes told O Antagonista that the tariffs are politically driven ahead of next year’s U.S. presidential election.
“Trump is making a very serious mistake if he thinks we are pursuing a competitive devaluation,” Guedes said.
“It’s part of the game,” Guedes said, adding that he believes Trump’s decision surprised even his own economic advisors. Guedes said he believes the dispute will be resolved amicably via “calm” negotiation, O Antagonista reported.
Guedes admitted that the Brazilian real will be weaker in the coming years than had previously been the case, but said that was because interest rates will also be lower.
“We are going to have lower interest rates … and a slightly weaker exchange rate for many years than we have been used to,” Guedes said, adding that he is comfortable with this scenario.
The central bank has cut its key Selic interest rate to a record low 5.00%, and last week the dollar hit a record high of 4.2770 reais
“I’m not saying it (the dollar) is going to 4.50 … I’m saying it is now normal to have a slightly higher (dollar) and lower interest rate than before,” Guedes said.
(Reporting by Eduardo Simoes and Jamie McGeever, editing by Louise Heavens and Bill Berkrot)