Brazil's president has again criticized the European Central Bank's decision to give banks over one trillion euros in low-interest loans in recent months. She said the "monetary tsunami" was hurting Brazil.
Chancellor Angela Merkel and Brazilian President Dilma Rousseff clashed on Tuesday over the European Central Bank (ECB) decision to award moneylenders two influxes of low-cost loans over the past few months.
Rousseff said Brazil was "concerned about the monetary expansion in Europe and the United States," which she said amounted to "artificial currency devaluation."
In Europe, the ECB has doled out two sets of cheap credit for banks, offering nearly 490 billion euros ($642 billion) last December and a further 530 billion at the end of February. All the money was loaned out at the minimum permitted interest rate of 1 percent.
Brazil, a country with high interest rates and a relatively strong currency, was suffering from the devaluation of the euro and the dollar, Rousseff said, because it was making imports cheaper in Brazil, while rendering Brazilian exports less competitive abroad. Rousseff had made similar, stronger statements to business and labor leaders in Brazil last Thursday, complaining of a "monetary tsunami" from developed countries flooding the Brazilian market.
The German chancellor said she understood Rousseff's concerns but sought to stress that the policy was an impermanent emergency measure to bolster liquidity among European banks.
"It is a temporary measure intended to improve the competitiveness of European countries," Merkel said, also countering that developing countries like Brazil should combat some of their more protectionist economic policies.
Merkel and Rousseff were speaking on the sidelines of the CeBIT consumer electronics trade fair in Hanover, the largest of its kind. Brazil is this year's partner country at CeBIT. Merkel and Rousseff attended the glitzy opening ceremony together on Monday night.
msh/ng (AFP, dpa)