This is not to say that a free trade zone cannot function well if countries have different exchange rate arrangements. England has a floating rate while European countries adopt a common currency. But movements in the exchange rates between the Pound and the Euro are not as extreme and sudden as movements between the peso and the real. Let me end by observing that most economists who believe in free trade as a road to prosperity in Brazil and elsewhere also believe that trade agreements and regional blocks have to pass a test. A good trade agreement must be trade enhancing and conducive to multilateral trade liberalization.
Regional agreements can be a stepping stone or a stumbling block to multilateral agreements.
Countries that are excluded from a regional agreement will tend to create new blocks. In practice this solution does not work because any new membership would have to be negotiated. Political realism seems to suggest that multilateral negotiations can be so difficult that it would be better to insure at least free trade among some countries and regions. And perhaps these blocks would facilitate the multilateral agreements by reducing the numbers of actors at the table. But this is pie in the sky.