Itaú BBA - Brazilian real near highs in 2016

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Brazilian real near highs in 2016

October 24, 2016

News regarding inflows due to adherence to the repatriation program favored the BRL last week

(full report attached)

Exchange rate reached 3.14 reais per US dollar last week

News regarding inflows due to adherence to the repatriation program favored the Brazilian currency in the week. Despite the strengthening of the U.S. dollar on Friday, the exchange rate closed the week at 3.16 reais per U.S. dollar, with a 1.6% appreciation, outperforming peer currencies. (Charts 1, 2, 3 and 4).

Central bank maintained the pace of reverse swap auctions

The monetary authority maintained the amounts of reverse swap auctions at $250 million. The offers continue to be placed on a daily basis, with another auction announced to take place today. Currently, the central bank’s short position in FX swap contracts stands at $30 billion. (Charts 5 and 6).

Another week of positive currency flow

The currency flow is positive in October, with $1.2 billion inflows. Last week, $1.5 billion trade inflows outsized $368 million financial outflows. (Charts 7 and 8).

No external bond issuances last week

There were no bond issuances abroad by Brazilian companies last week. Brazilian corporate bond offerings total $19 billion year-to-date vs. $8 billion in 2015 (Chart 9 and Table).

Positive foreign flows to the stock market

Foreign flows to the stock market are positive by $1.3 billion in October, with $967 million inflows to the spot market and $344 million inflows to the futures market. (Chart 10).

Investors maintained their positions in currency derivatives

Investors maintained their positions in currency derivatives virtually unchanged. Non-residents, banks and institutional investors hold positions of $ 10 billion, $ 31 billion and $ -5.9 billion respectively. (Charts 11, 12, 13 and 14).


 

 



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