The world is in an "international currency war" as governments manipulate their currencies to improve their export competitiveness, said Guido Mantega, the Brazilian Finance Minister.

Mr Mantega's speech to Brazilian industrial leaders on Monday included some of the strongest comments to date by any senior government official on the recent bout of currency intervention by countries, including Japan and China.
Brazil's currency, the real, is now the world's most overvalued major currency, according to Goldman Sachs.

Near a 10-month high against the dollar, the real continued to rise after Mantega's comment as traders bet the government may be waiting for the outcome of Sunday's presidential election before taking action.

"We're in the midst of an international currency war," Mr Mantega said. "This threatens us because it takes away our competitiveness."

"Japanese authorities intervened to sell yen on September 15, the first such intervention since March 2004, while the United States has vowed to rally global heavyweights on China's currency, the yuan, which many economists say is undervalued."

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