How to Buy BRICS Currency: A Step-by-Step Guide

Interest in global markets has grown significantly, leading many to explore investment opportunities beyond traditional domestic assets. Among these, the currencies of the BRICS nations—Brazil, Russia, India, China, and South Africa—have drawn particular attention. Acquiring these currencies can be a valuable step for individuals seeking to diversify their financial holdings or engage in international transactions.

Understanding BRICS Currencies

The BRICS acronym represents a group of major emerging economies, each with its own distinct currency. Knowing the official ISO codes for these currencies is fundamental when engaging in international finance, as these codes standardize currency identification across global financial systems.

Brazilian Real (BRL)
Russian Ruble (RUB)
Indian Rupee (INR)
Chinese Yuan (CNY)
South African Rand (ZAR)

The Chinese Yuan has two distinct forms: CNY and CNH. CNY, or onshore Yuan, is traded within mainland China and its value is closely managed by the People’s Bank of China. Conversely, CNH, or offshore Yuan, is traded in markets outside mainland China, primarily Hong Kong, and its value is influenced more by market forces. Individuals looking to acquire Chinese currency for speculative purposes or for use outside mainland China typically engage with CNH.

Methods for Acquiring BRICS Currencies

Acquiring BRICS currencies can be achieved through several avenues, each suitable for different objectives, ranging from direct investment to practical use for international payments.

Foreign Exchange (Forex) Trading

Foreign exchange (Forex) trading is a primary method for direct acquisition, allowing individuals to buy and sell currency pairs involving BRICS currencies. This is typically done through online forex brokers, where participants can speculate on currency value fluctuations. Forex trading involves exchanging one currency for another, with transaction costs often built into the bid-ask spread.

Currency-Denominated Financial Products

Currency-denominated financial products offer another way to gain exposure to BRICS currencies without directly holding them. Exchange Traded Funds (ETFs) and mutual funds are examples of such instruments. These products are designed to track the performance of a specific currency or a basket of currencies, providing an indirect means of acquisition. Investors purchase shares in these funds, thereby gaining exposure to the underlying currency’s movements.

Direct Bank Transfers

Direct bank transfers, also known as international wire transfers, facilitate the conversion of funds into a BRICS currency for specific purposes like travel, overseas purchases, or supporting family abroad. This method involves sending funds from an existing bank account to a recipient account in the desired currency. While effective for direct use, international wire transfers typically incur fees and may involve less favorable exchange rates compared to specialized trading platforms. Outgoing international wire transfer fees from US banks can range from approximately $5 to $75, with incoming transfers up to $25. These transfers generally take one to five business days to process.

Physical Currency Exchange

Physical currency exchange is also an option, primarily for travelers or for acquiring small amounts of foreign currency. This method involves exchanging cash at airports, banks, or currency exchange bureaus. While convenient for immediate needs, physical exchanges often come with less competitive exchange rates and may involve additional service fees, making them less suitable for larger transactions or investment purposes.

Selecting a Trading Platform or Service

Choosing the right platform or service is a crucial step in acquiring BRICS currencies, as different options cater to varying needs and transaction sizes.

Online Forex Brokers

Online forex brokers are suitable for individuals interested in actively trading currency pairs. When selecting a forex broker, it is important to ensure they are regulated by relevant authorities, such as the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) in the United States. These regulatory bodies oversee broker activities to protect investors and maintain market integrity.

Investment Brokerages

Investment brokerages are the appropriate choice for those looking to acquire currency-denominated ETFs or mutual funds. When evaluating these brokerages, confirm they offer the specific BRICS currency products desired. Investors should also consider the expense ratios of the ETFs, which represent the annual fees charged by the fund. Commission fees for trading ETFs have become less of a concern, as many platforms now offer commission-free online ETF trading.

Direct Bank Transfers

For direct bank transfers, individuals should evaluate their existing bank or specialized international transfer services. Key factors to consider include the exchange rates offered, the transfer fees, and the estimated speed of the transaction. Some banks may offer reduced fees for transfers made in the foreign currency rather than US dollars. Understanding the bank’s cutoff times for international transfers is also important, as transactions initiated after these times will be processed on the next business day.

Regardless of the chosen service, several overarching criteria should guide the selection process. Regulatory compliance is paramount to ensure the security of funds and adherence to financial regulations. Verifying that the platform supports the specific BRICS currencies of interest is also essential. Additionally, understanding the fee structure, including spreads, commissions, and transfer fees, is important for managing overall transaction costs. Finally, assessing customer support availability and the platform’s account features, such as minimum deposit requirements and funding methods, helps ensure a smooth experience.

Executing a Currency Transaction

Once a suitable platform or service has been identified, the process of executing a currency transaction involves several procedural steps.

Account Setup

The initial step typically requires setting up an account. This process involves providing personal information and completing a Know Your Customer (KYC) verification. Financial institutions are mandated to verify identity to prevent financial crimes. Required documentation usually includes government-issued identification and proof of address.

Funding the Account

After account setup, the next phase involves funding the account. Most platforms offer various deposit methods, including bank transfers, debit or credit card payments, and e-wallets. The time it takes for funds to become available can vary, with bank transfers typically taking a few business days, while card payments or e-wallet deposits may be processed more quickly. It is important to confirm the platform’s specific funding options and any associated deposit limits or fees.

Placing a Currency Order

With the account funded, the actual placement of a currency order can occur. For forex trading, this involves selecting the desired currency pair, such as USD/BRL, and specifying the amount to be traded. Traders can choose between different order types, such as a market order, which executes immediately at the current price, or a limit order, which executes only when a specific price is reached. For international bank transfers, the process involves initiating the payment through the bank’s online portal or in person, providing the recipient’s bank details and the amount to be transferred.

Monitoring the Transaction

Following the execution of the transaction, it is advisable to monitor the account. Platforms typically provide a transaction history where all completed trades or transfers are recorded. This allows for verification of the transaction details, including the exchange rate applied and any fees deducted. Regularly checking account balances ensures that the acquisition was successful and reflects the correct amount of the acquired BRICS currency.