Itaú BBA - BRL outperforms its peers during the week

FX and Capital Markets

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BRL outperforms its peers during the week

January 23, 2017

The BRL closed the week at 3.17, appreciating 1.36% from a week earlier and outperforming its peers

(full report attached)

Brazilian currency strengthens to below 3.20 reais per U.S. dollar

The Brazilian currency strengthened against the dollar during the whole week and closed at 3.17, appreciating 1.36% from a week earlier and outperforming its peers (Charts 1, 2, 3 and 4).

Central bank resumes interventions in the FX market

Last week, the monetary authority resumed rollover auctions of contracts expiring in February. Auctions began on Tuesday and were carried out daily, with another one taking place today. If this pace is sustained throughout the month, the central bank will roll over all contracts expiring in February. The central bank’s short position in FX swaps stands at $27 billion (Charts 5 and 6).

Currency inflows on January 9-13

Last week, there were $5.1 billion financial inflows and $54 million trade inflows. In January, the flow is positive by $4.1 billion (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 $5.2 billion year-to-date vs. $19 billion in 2016 (Chart 9 and table).   

Foreign flows to the stock market are positive

Foreign flows to the stock market are positive by $946 million in January, as $1.035 billion inflows to the spot market outsized $89 million outflows from the futures market (Chart 10).

Non-residents changed their position in dollar futures

Non-residents increased their long position in dollar futures by $1.2 billion. Non-residents, banks and institutional investors hold positions of $12.3 billion, $19.9 billion and $ -6.5 billion, respectively (Charts 11, 12, 13 and 14).


 



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