US seeks allies in currency battle

US Treasury Secretary Timothy Geithner tried to enlist Brazil as an ally in the efforts to get China to allow its currency to appreciate, media reported Tuesday.
During his visit to Brazil Tuesday Geithner met with Brazilian President Dilma Rousseff, Finance Minister Guido Mantega and Central Bank President Alexandre Tombini, looking to strengthen ties before President Barack Obama's visit in March and to foster cooperation on economic issues.
Washington and Brasilia are "fundamentally aligned" and must act together to achieve a better global economic system, Geithner said.
He avoided mentioning China in public. Yet in private, he urged Brazil to do more to lobby China to let its currency appreciate, arguing that a weak yuan was just as much a problem for Brazil as it is for the US, a Brazilian official with direct knowledge of the discussions told Reuters.
Brazil may outline its agreement with the US over the yuan in a statement as early as March, the Financial Times said.
Zhang Sen'gen, a researcher at the Institute of Latin American Studies at the ChineseAcademy of Social Sciences, told the Global Times that it seems unlikely the US and Brazil will take any concrete steps to pressure China on the currency issue.
"Given the fact that China is still the biggest buyer of Brazilian exports, more conflicts with China is definitely not what Brazil wants," Zhang said. "While the domestic economy in Brazil is going through a hard time due to the rising exchange rate of the Brazilian real, it needs to expand exports to ease the pressure on manufacturers."
In the newly released biennial report on international economic conditions and exchange-rate policies by the US Treasury Department, Washington refused to label Beijing as a currency manipulator while commenting that "insufficient" progress had been made on the yuan's appreciation.
"It is in China's interest to allow the nominal exchange rate to appreciate more rapidly," the department said in a statement.
Zhang Yansheng, director of the Institute of Foreign Trade at the National Development and Reform Commission, said that it was irresponsible for the US to blame the Chinese currency for the imbalanced trade figures between China and America or other countries.
"The sooner the US realizes the fact that appreciation of the Chinese currency is not a solution to all their domestic economic problems, the sooner they will recover from the current recession," Zhang added.