Learning to love stronger currencies

Overview

BRIC countries have long prioritized economic growth above everything else on their agenda. Their success in fostering growth, however, has led to record capital inflows that are increasingly challenging their ability to restrain inflation and rampant credit growth.

A growing awareness of the political costs of rising prices is forcing BRIC governments to shift their attention to inflation reduction and control. As a result, they are willing to tolerate greater currency appreciation...