The world is on the road to an all-out trade war unless the United States and China stop manipulating their currencies, says Brazilian Finance Minister Guido Mantega.

China and the United States have been tweaking their exchange rates to gain favorable trade advantages as well as to fuel economic growth, disrupting other nations' exchange rates in the process.

The Brazilian real has strengthened considerably recently, which hurts the country's all-important export sector.

Mantega says Brazil is taking steps to keep the currency from strengthening further and adds his country will take up the issue before the World Trade Organization and other international bodies.

China and the United States are the worst offenders, Mantega tells The Financial Times. "This is a currency war that is turning into a trade war."

Low interest rates, as well as expansionary monetary policy in the United States, is prompting investors there to send their money into more profitable markets abroad.

All that money flowing into those markets can disrupt their exchange rates.

China, accused of keeping its own currency artificially cheap, says it hasn't seen significant flows of such hot money.

"In the campaign against hot money in 2010, we did not find any organized or big-scale hot money inflows," Liu Wei, a director at the State Administration of Foreign Exchange, tells Chinese-language New Century Weekly, according to Reuters.

"Although we cannot rule out hot money flowing into China from abroad for carry trades, that is not usually the case and it is not proper to blindly overstate the scale of hot money."