BRICS nations join hands to tackle strong dollar

Written by Reuters | Brasilia | Updated: Jun 26 2013, 10:05am hrs
Major emerging-market nations will work together to limit the effects that a strong US dollar could have on their economies as the Federal Reserve signals plans to scale back its massive stimulus program, the Brazilian government said on Monday.

Brazilian President Dilma Rousseff and her Chinese counterpart, Xi Jinping, discussed ways to strengthen policy coordination on Monday in a telephone conversation, said Thomas Traumann, spokesman for the Brazilian government. Rousseff will contact other leaders of the BRICS group, which include Russia, India and South Africa, later this week to discuss concrete measures.

The BRICS will decide on coordinated action related to the global appreciation of the US dollar at a meeting in July in Russia, Traumann said without elaborating.

Brazil and other developing nations until recently the main engines of the global economy - are growing anxious about the expected withdrawal of stimulus in the US, which has sparked a sell-off in local markets.

In his conversation with Rousseff, Chinas Xi stressed that new and complex developments in the global markets called for closer coordination among the BRICS, a Brazil-based diplomat told Reuters.

There is a consensus that the BRICS need to strengthen communication and coordination at a time when we have more complex and new factors affecting global markets, said the official, who was briefed on the presidents discussion. The official, who asked for anonymity, gave no specifics.

Expectations that the US Fed will scale back its bond-buying program has dragged the Brazilian real to four-year lows, prompting the government to remove capital controls in a bid to bring more dollars into the economy.