Most currency traders do not bother with visiting the country whose currency they are speculating i, but I go to Brazil often and consider my observations important for my own trades. My business needs require frequent forex between gold, USD, silver, BRL, and occasionally Euro and CHF.

If I am on the right side of the trade, then Brazil/USD currency trading can be a screaming source of profits.

Here is why the BRL offers such outsized returns:

Brazil's Real vs. U.S. Dollar Foreign Exchange Rate

Unlike China, where much of the growth is financed by zombie banks, Brazil’s banks have relatively more solid balance sheets, along with more stable producers to invest in. With the agricultural supply tightness across almost all soft commodities – witness the sugar and rice escalations – Brazil’s banks are funding ag, as opposed to another narrow margin, oversupplied electronics or widget manufacturer in China. Besides, the BRL has so much volatility relative to the USD, there are profits to be made coming and going.

The Yuan/USD peg keeps the Asian behemoth out of the forex spec play. Brazil’s Real is definitely an exotic, and can be a tricky one to find a counter party on, but if you can, there is both a long term and short term trading opportunity of year making profit potential.
I have both won and lost on the BRL trade, depending on my business needs in Brazil. As it stands, I am heavily long the BRL and see no near term reasons to change my mind.

So long as the world continues to eat, Brazil’s currency will continue to escalate. Brazil is becoming the margin producer of many food items, while production across both N. America, Europe, and Asia continues to suffer from weather dislocations.

For the gunslingers, the BRL/USD trade in the forex trading market is a prime opportunity to ride the fall of the USD, and rise of a new powerful currency. For the longer term investor, ETF’s that invest in Brazil or Ag commodities will bring much the same trend, though without the day to day profit potential.

A profitable trading day to all!