The debate over currencies is continuing as the United States (US) attempts to get the support of Brazil in its attempt to encourage China to allow the renminbi to float more freely against other currencies, and in particular the US dollar. The US has for some time made thinly veiled allegations that China is manipulating its currency in order to keep its exports competitive. Other countries have also been accused of trying to influence the value of their currencies to try and drive export-led growth - including the US!

In September, Brazil raised the issue of currencies at the G20 summit and hinted that the country would take steps to prevent its currency from strengthening too much. Since 2009, the Brazilian real has appreciated by around two fifths against the dollar. Brazil exports a large amount of commodities to China and the strengthening of the real along with the tendency of the Chinese to peg the renminbi against the dollar has meant that its exporters are now less competitive. If the US can get Brazil to offer its support to persuade the Chinese to adopt a more flexible approach to its currency then it will feel it has a stronger argument to put forward in future G20 summits.

In an attempt to secure some support from Brazil, the US Treasury Secretary, Tim Geithner, has visited Brazil this week to talk to the government about currencies. He commented that capital inflows to Brazil had risen sharply and that the flows were not helped by the "policies of other emerging economies that are trying to sustain undervalued currencies..." This could be interpreted as an apparent dig at the Chinese and also an attempt to bring Brazil into the same fold as the US - a victim of currency manipulation.

Whether the US is able to persuade the Brazilian government to see things in this way is another matter. The Brazilians have usually tried to align themselves more with other emerging economies and whether they will now change emphasis and risk alienating the Chinese is open to debate. Analysts are expecting some announcement by the Brazilian government when the US President Barack Obama visits Brazil in March. We shall then know more about whether Tim Geithner's visit this week has gained the US an ally in its continuing dispute with the Chinese.