Exchange rates, risks and opportunities.

Over the last month Brazilian Currency experienced it depreciation, as the interest rates and the inflation gets higher on a negative balance of trade scenario. We experienced this in a country that has no technology development culture, still attached to a commodity production basis and depending on imported equipments and machinery.

Bad news for service providers, for retail companies, importers, regular citizens which consume imported products, which wants to travel abroad. Bad news for investors that had money in Brazilian banks and saw they capital shrink with lower rates of Real.

On the other hand, there are some who might get advantage of the Brazilian lower rates, the competitiveness for Brazilian industries who wants to export new products, grain producers and exporters. For those who want to invest in Brazil this year will face a lower rate and probably in a longer term, will see their capital to increase again. The opportunities for those who are starting new plants in Brazil just increased with lower labor costs, lower energy rates.

For those that will bring new plants to Brazil: such as BMW, Hyundai, Honda, they will face lower production costs.  Higher interest rates will also help who wants to earn more than 8% on their investment (before taxes). The government also cut off taxes for those who invest in Brazilian fixed interest rates investment (https://brazilog.webnode.es/news/is-brazilian-economy-waking-from-2013-nap-/).

Every change on market brings risk and opportunities. Your position will define the success you’ll have on every change. If you got guts to invest in a emerging country you also should have brains for hedging your investment and avoid losses due floating exchange rates. Buying future exchange rates, options on future market knowing the market, it risks and opportunities make all the difference for those who will invest in this emerging country full of opportunities.