Why are they raising interest rates in Brazil?
Brazil raising interest rates probably refers to the central bank raising their interest rate which means that it is more costly for banks to loan money from the government and therefore the amount of money in circulation (as per quantity theory) should go down. It is a policy decision (possibly wrong depending on who you ask) in a difficult economic situation where a country faces both inflation and a downturn.

Your logic about the economy becoming even weaker might very well be true (and I'd agree with lowering rates being a better option). The questions about effects to trade are slightly more complex and not necessarily as straightforward.