The author is long Petrobras ( PBR ), Embraer ( ERJ ) and the Market Vectors Brazil Small-Cap ETF ( BRF ). Brazil's central bank plays a difficult game, balancing one of the world's most rapidly-appreciating currencies against the ever-present danger of inflation and the needs of an economy which must diversify beyond commodity production into other sectors. Thought it never reached Zimbabwe-like levels, the government was forced to raise interest rates many times, and had to experiment with several devaluations and currency shifts until former president Henrique Cardoso's Plano Real finally slayed the monetary beast.