20090615 geithner 18
U.S. Treasury Secretary Timothy Geithner participates in a question and answer session at the Time Warner Center in New York City, where he discussed the Obama administration's efforts to repair and strengthen financial systems. - 


JEREMY HOBSON: Now let's get to Treasury Secretary Geithner's visit to Brazil. He's been talking this morning about how much Brazil is being hurt by another emerging economy that keep its currency undervalued.

Translation: China.

Julia Coronado is chief economist at BNP Paribas, and she's with us live. Good morning.

JULIA CORONADO: Good morning.

HOBSON: So Treasury Secretary Geithner is there in Brazil today, President Obama heads there next month. Why is the Brazilian Economy so important to the United States?

CORONADO: Well, this recovery globally has been all about the merging markets. More than three quarters of all global growth last year came from countries like Brazil and India and China. And so, they are of increasing importance and we do need to take them seriously. And our policy's ultimately are very connected.

HOBSON: And Brazil I saw, is the second largest economy in the Western Hemisphere. I'm sure there are a million things that the Secretary of Treasury could be talking about down there thought. Why is he talking about the Chinese currency?

CORONADO: Well, that's one area where the emerging markets still have yet to transition into the global leaders. China in particular wants to maintain a low valued currency and it's position as a competitive exporter. Rather than letting it's currency rise. And this hurts Brazil because Brazil does let it's currency be market based. And so if China's undervalued by definition, Brazil is over valued and therefore they're exporting less and growing less than they could otherwise. The other problem that is generated by these policies is global inflation. We are seeing food and energy prices rise sharply around the globe. It's been causing political instability and from the U.S. perspective it hurts U.S. consumers at a still fragile place in the recovery.

HOBSON: Julia Coronado, chief economist at the investment bank, BNP Paribas, thanks so much for your time.

CORONADO: My pleasure.

Follow Jeremy Hobson at @jeremyhobson