With concerns greatly mounting in Brazil about inflation, it is becoming a near certainty that its central bank will need to raise rates in April.
In Brazil, markets are expecting inflation to rise to 5,18% in the latest Focus survey released today (in Portuguese). This is the 11th straight rise in the inflation expectations. One month ago, the expectation on the IPCA index was 4,99%.
The ETF to use for the Brazilian real is BZF:
If Brazil does indeed raise rates, then you'd expect BXF to move higher. it is already one of the best performing currecnies. Please take a look at ther performance of BZF vx FXA, FXC, UUP, and FXE:
Top performer: Brazilian Real. Worst performer: US Dollar.
For those looking for income, BZF also pays a dividend of about 1%:
In addition, BZF has options that can boost income, although they are relatively illiquid:
If you manage to sell the October 30 for $0.35, that adds another 1.3%. In the event those shares are called, that means a profit of 13.7%.
You can also sell puts to get a lower entry price. Anyway you look at this it's a an attractive deal, even if the USD rises against other currencies.ETF overview:
Disclaimer: The author does not hold any positions in BZF, FXA, FXE, or UUP, although the author holds Canadian cash.