The BRICS countries – Brazil, Russia, India, China and South Africa – represent some of the fastest growing emerging economies in the world. Their currencies offer attractive investment opportunities for European investors looking to diversify globally. However, investing in BRICS currencies also comes with risks due to higher volatility. This article provides an overview of BRICS currencies and strategies European investors can use to gain BRICS currency exposure.
Understand BRICS Currency Basics and Recent Performance
The Brazilian real, Russian ruble, Indian rupee, Chinese yuan and South African rand are the national currencies of the BRICS countries. In recent years, BRICS currencies have seen significant volatility against major currencies like the euro and US dollar. For instance, the Brazilian real lost 30% against the dollar in 2015 due to falling commodity prices and political turmoil, while the yuan fell 10% against the dollar in 2015 after China changed its exchange rate regime.
Use Currency ETFs and Forex Trading to Invest in BRICS Currencies
One way for European investors to gain exposure to BRICS currencies is through currency ETFs that track the performance of a BRICS currency against a benchmark like the euro or dollar. For example, the WisdomTree Brazilian Real ETF tracks the real versus the dollar. Investors can also trade BRICS currency pairs through forex brokers. However, currency trading carries risks like volatility and leverage.
Invest in BRICS Country Index Funds and Stocks
Rather than investing directly in BRICS currencies, European investors can invest in BRICS country index funds and stocks traded on European exchanges. For instance, the iShares MSCI Brazil ETF offers exposure to Brazilian stocks. Similarly, investors can buy stocks of leading Indian, Russian and Chinese companies listed in Europe.
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Add BRICS Currency Exposure to a Diversified Portfolio
BRICS currencies offer European investors an opportunity to diversify globally and benefit from the growth potential of emerging markets. A mix of currency ETFs, country-specific funds and direct stock investments allow investors to access BRICS currencies in a controlled manner.