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I presume that there is at least the possibility that some event could cause the trade to go the other way and BCB would make money instead of losing money, but as all the settlement is in BRL, which BCB issues, the problem becomes one of keeping profits made from this swap by Brazilians from being used to buy US$s. I suppose it depends on how long the BRL continues to depreciate wrt the US$.
Assuming that the events of the World Cup and the Olympics bring lots of foreign currency into Brazil, how is the amount of such currency expected to compare to the amount of profits to the comprador class from the swap scheme? Might it be sufficient to reverse the direction of the swap or lead those engaging in the swap to wind it down?
Another question is the extent to which the depreciation of the BRL wrt the US$ is due to the capital investment in sports facilities in Brazil. It is so typical for the host of such events to end up paying exorbitantly for the 'honor'. I have little doubt that a similar investment in education, health and transportation infrastructure would have been far more useful to the long term benefit of the Brazilian economy. Local elites have undoubtedly benefited handsomely, but for the rest - not so much.
"It is not necessary to have hope in order to persevere."
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