Itaú BBA - BRL hovers around 3.40

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BRL hovers around 3.40

April 23, 2018

The BRL closed the week at 3.41, appreciating 0.3% and outperforming its peers

(full report attached)

Exchange rate was virtually stable around 3.40 during the past week

The Brazilian real strengthened early in the week, but emerging market currencies lost momentum later on, after the U.S. Federal Reserve confirmed the outlook for gradual increases in its benchmark interest rate. The exchange rate closed the week at 3.41 reais per dollar, appreciating 0.3% and outperforming its peers (Charts 1, 2, 3 and 4).

Central Bank continued to roll over FX contracts expiring in May

The monetary authority continued to roll over the $2.6 billion in FX swap contracts due in May. If the same pace is maintained until the end of the month, contracts will be fully rolled over. The Central Bank’s stock of FX swaps now stands at $24 billion (Charts 5 and 6).

Currency inflows in April

The currency flow was positive in the second week of the month, driven by $1.6 billion financial inflows and $1.4 billion trade inflows. Month-to-date, the flow is positive by $5.7 billion (Charts 7 and 8).

No external bond issuances last week 

There were no new bond issuances abroad by Brazilian companies last week. Year-to-date, Brazilian bond offerings overseas total $14.3 billion (Chart 9 and table).  

Foreign flows to the stock market are positive in April

Foreign flows to the stock market are positive this month, driven by $203 million inflows to the futures market and $807 million inflows to the spot market (Chart 10).

Non-residents increased their position in dollar futures 

Non-residents increased their position in dollar futures by $1.5 billion. Non-residents, banks and institutional investors hold FX derivative positions (dollar futures, cupom cambial and swaps) of $18.6 billion, $8.5 billion and $ -3.1 billion, respectively (Charts 11, 12, 13 and 14).

 



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