Most market watchers point to Brazil as the star within the Latin American region. With the largest economy in Latin America, the country’s currency, the real (BRL), is considered to be the benchmark currency of the region.

The real has been trading around three-year highs this year , and some analysts contend the currency may have farther to go on the upside. Currently, with the U.S. dollar/ Brazilian real rate (USD/BRL) trading around 2.47, analysts say the real could run toward 2.40 or 2.30 in the near-term.

Many credit Brazilian President Lula da Silva with implementing solid economic reforms that offer a foundation for additional currency strength.

Bank of America’s Estebanez called the real “the Latin American currency with the most potential for short-term appreciation. The [money] flows are very supportive, and [its] interest rates at 19.50 percent [are] a huge spread over everybody.”

The key event currency traders will need to monitor is the potential for central bank intervention. The Brazilian central bank was not active in the open markets during April and May, but previously had been buying dollars and selling reals in an attempt to stem the real’s appreciation.

“The question is, will the central bank tolerate the kind of pressures that seem ready to drive the currency to stronger levels?” says Estebanez.