Brazilian President Dilma Rousseff Thursday accused the developed countries of adopting a monetary expansion policy which would lead to a "monetary tsunami" and hurt the emerging economies.
Rousseff made the remarks during a signing ceremony for an agreement on improving working conditions in the construction industry.
She said the developed countries have used $4.7 trillion in the past few years to deal with the financial crisis and economic downturn, but the cheap money could cause a "monetary tsunami" and have a huge impact on the emerging economies, reported Xinhua.
She said the inflow of international hot money has caused an appreciation of Brazil's currency real, which further weakened the competitiveness of the country's industry.
Rousseff said the government is committed to defending the Brazilian industry and making sure that the "currency war" launched by the rich countries would not hurt the Brazilian market.
Earlier Thursday, the Brazilian government announced changes in the incidence of the Tax over Financial Operations (IOF) charged to foreign investments.
Last April, the government raised the IOF to six percent over short-term foreign investments that leave the country within two years. Now, the government extended the six percent IOF to foreign loans and bonds that exit Brazil within three years.
Brazilian Finance Minister Guido Mantega said the changes are aimed at halting the appreciation of the country's real currency. "The government will not just stand there watching the currency war," he said.
Meanwhile, Brazil's central bank will buy dollars in the currency market to reduce its circulation and increase the Brazilian foreign exchange reserve.
Mantega said Brazil welcomes productive foreign investors, but will "penalise" speculators.
Brazil's real has risen 7.9 percent against the US dollar in the first two months of 2012. Economic experts feared the weaker dollar stimulated Brazil's imports and made exports more difficult, which would bring imported inflation and further damage the local industry.