An exchange traded fund following the movement of Brazil’s currency against the U.S. dollar has been rising after a steep pullback in late 2010 due to government intervention.
The $410 million WisdomTree Dreyfus Brazilian Real Fund (NYSEArca: BZF) is up about 7% year to date and more than 20% over the past 12 months, according to Morningstar.
Capital inflows to Brazil have pushed the currency, the real, higher and pressured exports. The Brazilian government has intervened in currency markets and bought dollars in an effort to cool the rise.
Investors like Brazil’s growth story and the economy is booming. Brazil Central Bank President Alexandre Tombini stated that economy is experiencing sustainable growth, reports Daniel Horch for iMarketNews.
The government recently announced that first quarter GDP expanded 1.3% over the previous quarter and 4.2% year-over-year.
WisdomTree Dreyfus Brazilian Real Fund - (click chart to expand)
“Domestic demand continues to be the main support of the economy,” said Tombini, “with family consumption registering 5.9% growth compared to the first quarter of 2010 (the thirtieth consecutive positive variation in this basis of comparison), a performance which has been spurred by the moderate expansion of credit to families, by the generation of employment and wages.”
However, private sector economists and the Central Bank project a minor slowdown in the second quarter due to tightening fiscal and monetary policies.
The Brazilian telecommunications industry is a particularly noteworthy sector of the country. The increasing number of people using of mobile phones, which has jumped 46.9% in the first quarter year-over-year, has fueled the industry, writes Juan Carlos Arancibia for Investor’s Business Daily.
ETFs that invest in Brazilian stocks include:
- iShares MSCI Brazil Index Fund (NYSEArca: EWZ)
- Global X Brazil Mid Cap ETF (NYSEArca: BRAZ)
- Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF)
Max Chen contributed to this article.