Oh the USD-BRL exchange rate issue... I've been a supporter of...

Oh the USD-BRL exchange rate issue... I've been a supporter of currency risk mitigation, as some posters here might recall of my previous laments that SJ wasn't too keen on currency hedging. My position has changed somewhat after a friend explained from a different angle.

Basically, he said that it's actually riskier to hedge on a foreign currency if that country is politically and economically unstable or in turmoil. Unfavourable international credit ratings and out-of-control debt can destroy a country's currency value almost overnight. In an alternate reality where BDR did hedge USD1.00 to BRL 3.40 but then something very bad happens in Brazil and the exchange rate rises to USD1.00 : BRL6.80. BDR will still end up losing despite the hedging.

Per http://countryeconomy.com/national-debt/brazil Brazilian Govt. has a high debt to GDP ratio of 78% at end of 2016. That's shakier than Oz's 41% of GDP.

Cheers. R.

P.S. Thanks for the reply, col. R.