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BRL hits new lows

June 4, 2018

The exchange rate closed the week at 3.77 reais per U.S. dollar, underperforming its peers.

(full report attached)

Brazilian currency underperformed its peers last week 

Deterioration in the outlook for Brazilian stocks pressured the local currency last week. The exchange rate closed the week at 3.77 reais per U.S. dollar, depreciating 3.0% and underperforming its peers (Charts 1, 2, 3 and 4).

Central Bank announced extension in FX swap offers

The monetary authority announced last week that it will maintain in June the additional offers of FX swap contracts, as in the final weeks of May. For the time being, an additional 15,000 swap contracts per day ($750 million) are being offered, besides the full roll over of the $8.8 billion in contracts expiring in July. The Central Bank’s stock of FX swaps now stands at $32 billion (Charts 5 and 6).

Currency outflows in May

Financial outflows pressured the monthly result. Last week, $1.2 billion financial outflows offset $464 million trade inflows. The May flow was negative by $392 million (Charts 7 and 8).

No external bond issuances last week 

There were no issuances by Brazilian companies abroad last week. Year-to-date, Brazilian bond offerings overseas total $15.1 billion (Chart 9 and table).  

Foreign flows to the stock market are negative in May

Foreign flows to the stock market are negative in May, as $2.2 billion outflows from the spot market outsized $1.1 billion inflows to the futures market (Chart 10).

Investor positions in FX derivatives were virtually unchanged

Investor positions in FX derivatives barely changed last week. Non-residents, banks and institutional investors hold FX derivative positions (dollar futures, cupom cambial and swaps) of $29.9 billion, $3.1 billion and $0.6 billion, respectively (Charts 11, 12, 13 and 14).



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