As the “monetary tsunami” caused by the efforts of Europe and the U.S. to “artificially devalue” their currencies strengthen the Brazilian Real, Goldman Sachs’ Jim O’Neill lent his support to Brazilian policy makers’ efforts to weaken the real, saying it needs to decline 20 percent to keep Latin America’s biggest economy competitive.
“Brazil’s biggest cyclical challenge is to get rid of the strength of the real,” O’Neill, 54, said in an interview. He also said the currency needs to lose a fifth of its value to be “sustainable.”
The real strengthened 8.7% in the first two months of the year against the U.S. dollar… as investors and exporters poured $15.5 billion into Brazil since the beginning of the year. A stronger currency hurts exporters by making goods more expensive in dollar terms.