The U.S. is allowing its currency, the dollar, to devalue by expansionary fiscal and monetary policy. It's doing this through increasing spending, thereby increasing the debt, and by keeping the Fed funds rate at virtually zero, increasing credit and the money supply.
China is keeping its currency low by pegging it to the dollar, along with a basket of other currencies. It keeps the peg by buying U.S. Treasuries, which limits the supply of dollars, thereby strengthening it. This keeps the yuan low by comparison.
Brazil and other emerging market countries are concerned because the currency wars are driving their currencies higher, by comparison. This raises the prices of commodities, such as oil, copper and iron, which are their primary exports. This makes emerging market countries less competitive, and slows their economic growth.
