Is now the right time to invest in Brazil?

Earlier this year, we wrote about Brazil’s fluctuating exchange rate. Because of the upcoming presidential election, we predicted currency swings for the remainder of 2022. Now, just months later, it seems the financial markets are playing out pretty much as expected.

To the surprise of many, last month saw Brazil’s currency strengthen. Most pointed to geopolitical influences, such as the war in Ukraine or tensions in Asia. At one point, the exchange rate was 4.7 Brazilian reais to 1 US dollar.

But just 30 days later, it’s a very different scenario. This month, the exchange rate has seen a steady rise. Today, we’re already back to 5.2 Brazilian reais per 1 US dollar with the rate continuing to trend upward.

For American investors, this may be the perfect time to act. That oceanfront condo you’ve been wanting just got a little cheaper. That capital contribution to your Brazilian company is going to cost you a little less. The exchange rate can make a big difference when you’re paying in local currency.

How far this will go is hard to predict. In the last 10 years, the exchange rate has never broken 6 Brazilian reais to 1 US dollar. But, for most of that time, the rate was also far lower than where it’s at today.

No matter whether you invest today or hold off for tomorrow, keep your eye on the exchange rate. It’s changing, and it’s changing quickly.