Itaú BBA - BRL outperforms peer currencies

FX and Capital Markets

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BRL outperforms peer currencies

December 26, 2016

BRL appreciates and outperforms peer currencies.

(full report attached)

Brazilian currency appreciated 3.6% last week

Inflows to the local market and the low volume of dividend remittances led the BRL to outperform its peers, which were pressured by risk aversion in the external scenario. The exchange rate closed the week at 3.27 reais per dollar. (Charts 1, 2, 3 and 4).

Central bank made no interventions last week

Last week, the monetary authority did not carry out or announce intervention operations in the FX market. The central bank’s short position in FX swaps stands at $27 billion (Charts 5 and 6).

Currency outflows between Dec 12 and Dec 16

Over the week, there were financial outflows of $1.4 billion and trade inflows of $447 million. In December, the currency flow is negative by $2 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 $19 billion year-to-date, vs. $8 billion in 2015. (Chart 9 and table).

Negative foreign flows to the stock market

Foreign flows to the stock market are negative by $563 million in December. There were outflows of $302 million from the spot market and $261 million from the futures market. (Chart 10).

Investors changed their positions in dollar futures

Non-residents reduced their long position in dollar futures by $1 billion, while institutional investors reduced their short position by $600 million. Non-residents, banks and institutional investors hold positions of $10.8 billion, $21.3 billion and $ -3.3 billion, respectively. (Charts 11, 12, 13 and 14).



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