Itaú BBA - BRL ended 2017 at 3.31

FX and Capital Markets

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BRL ended 2017 at 3.31

January 2, 2018

Amid a benign international scenario and reduced liquidity, the BRL ended the final session of the year at 3.31.

(full report attached)

Brazilian currency was range-bound in the final week of the year 

Amid a benign international scenario for emerging market currencies and reduced liquidity, the exchange rate continued to hover slightly above 3.30 reais per dollar, ending the final session of the year at 3.31. The Brazilian currency appreciated 0.8% during the week, performing in line with its peers (Charts 1, 2, 3 and 4).

Central Bank carried out a line auction last week

The monetary authority offered $2 billion in a line auction on Tuesday, and $8 billion in line auctions in December. Meanwhile, its stock of FX swaps now stands at $24 billion (Charts 5 and 6). 

Currency flow was negative last week 

The currency flow was negative last week, as $6.9 billion financial outflows outsized $3.4 billion trade inflows. In December, the flow was negative by $6.2 billion (Charts 7 and 8).

No external bond issuances last week 

There were no bond issuances abroad by Brazilian companies last week. In 2017, Brazilian bond offerings totaled $31.9 billion (Chart 9 and table).   

Foreign flows to the stock market were positive in December

Foreign flows to the stock market were positive by $1.1 billion, driven by $261 million inflows to the futures market and $851 million inflows to the spot market (Chart 10).

Non-residents reduced their long position in dollar futures 

Non-residents reduced their long position in dollar futures by $2.9 billion last week. Non-residents, banks and institutional investors hold FX derivative positions (dollar futures, cupom cambial and swaps) of $11.8 billion, $16.5 billion and $ -5.2 billion, respectively (Charts 11, 12, 13 and 14).



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