Good morning! The U.S.-China trade war could become a currency war — and that is bad for Brazil. The São Paulo governor is in China, trying to get investments to boost the city’s metro system. Brazil’s violence map shows how crimes are concentrated in just 2 percent of Brazilian municipalities.
Risks of a U.S.-China currency war spell trouble for Brazil
The ongoing trade war between the U.S. and China (Brazil’s top 2 trading partners) is about to enter a more dangerous phase. As the Chinese Yuan sank against the U.S. Dollar (to CNY 7: USD 1), U.S. President Donald Trump labeled Beijing a “currency manipulator,” which could pave the way for sanctions from Washington. But, as China holds more than USD 1tr in U.S. Treasury securities, “the nightmare scenario would be the weaponization of Chinese official foreign exchange reserves against the U.S.,” writes The Financial Times’ John Plender.
Why it matters. A currency war can never end well—and they increase volatility across the globe. It is not an event limited to tariffs. Instead, it affects the interest rate market and the stock exchange, among other factors. Tony Volpon, head economist of UBS in Brazil, said in an interview: “When the...