Mitigating Currency Risk When Investing in LatAm

Mitigating Currency Risk When Investing in LatAm

ALI Speaks with City Credit Capital Brazil's Andrew Braine

DEC, 2011 Recent selloffs in emerging market currencies, which have caused sharp drops in such LatAm currencies as the Mexican peso and Brazilian real, are but latest development of an historical pattern, and they point to a stubborn truth: currency volatility is a problem when investing in the region, and investors are wise to hedge against it or position themselves to benefit from it. As Andrew Braine, the Director of City Credit Capital LatAm operations, “Investing in locally denominated vehicles in LatAm has its pro and cons, but being at the mercy of currency fluctuations can cause a lot of worries.” Mr. Braine says that it is “essential that investors hedge against such risk.” One way, he says, is by diversifying their portfolios with dollar-based vehicles. Another is by investing in Forex. “Intelligent investors,” he explains, “understand that they can significantly reduce their risk by diversifying their exposure. Tradin....

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