A surge in inflation and the plunge in the Brazilian real late last year also weighed on Brazilian assets. However, policy makers hiked benchmark borrowing costs by 75 basis points to 10.75% this year, the largest increase among major economies after Turkey.

“High interest rates open space for arbitrage with the currency,” Hideaki Iha, a foreign-exchange trader at Fair Corretora in Sao Paulo, said in the article. “The real benefits from that.”

WisdomTree Brazilian Real Fund

For more information on Brazil’s currency, visit our Brazilian real category.

Max Chen contributed to this article.