Is now the time to “buy Brazil”?

As the U.S. dollar continues to rise against emerging currencies, assets in countries such as Brazil have become much cheaper – and thus more attractive – for international investors. But does it make sense to take the risk and buy Brazilian stocks at this very moment? And if so, how to overcome bureaucracy and get the green light from the local authorities? What about the taxation over the gains?

The Brazilian Report tries to answer these and other questions to make the life of those who want to invest in Brazilian assets a bit easier.

How strong is the dollar?

This Wednesday, the U.S. dollar closed at BRL 3.83, the highest level since March 2016. Not even interventions from the Brazilian Central Bank have been able to prevent the depreciation of the Brazilian Real in the past couple of weeks. The American currency has already gained 22 percent over the Brazilian currency in comparison to its lowest point in 2018 – at BRL 3.14, on January 24.

The increasing uncertainty is directly linked to the general elections set to take place in October. The main presidential candidates have given few clues about their economic proposals. None of them has publicly committed yet to the pro-market agenda President Michel Temer has failed to implement to the fullest. Afraid of what might take place – and attracted by the promise of higher interest rates in the U.S., investors have taken their money elsewhere.

The rise of the U.S. Dollar is directly linked to another significant trend in the local markets: Ibovespa, Brazil’s main stock market index, has fallen over the past weeks and closed this...