Itaú BBA - BRL remains range-bound during the week

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BRL remains range-bound during the week

June 19, 2017

In a week shortened by the holiday, the exchange rate continued to trade between 3.25 and 3.30 reais per U.S.

(full report attached)

Amid political uncertainty, Brazilian currency ended the week slightly stronger

In a week shortened by the holiday, the exchange rate continued to trade between 3.25 and 3.30 reais per U.S. dollar. Lingering domestic uncertainties suggest that investors are cautious. The exchange rate closed the week at 3.29, appreciating 0.15% from one week earlier (Charts 1, 2, 3 and 4).

Central Bank continues to roll over FX swap contracts expiring in July

Last week, the monetary authority continued to roll over FX swap contracts expiring in July, at a pace of 8,200 contracts per day, and announced that another transaction will take place today. If this pace is sustained, contracts will be fully rolled over. The Central Bank’s stock of FX swaps now stands at $28 billion (Charts 5 and 6).

Currency outflows on June 05-09

The currency flow was negative last week, as $1.958 billion financial outflows outsized $950 million trade inflows. In June, the flow is negative by $1.3 billion (Charts 7 and 8).

$350 million raised in foreign bond markets last week

A Brazilian meatpacker issued $350 million in bonds overseas last week. Brazilian corporate bond offerings total $16 billion year-to-date vs. $11.5 billion a year ago (Chart 9 and table).   

Foreign flows to the stock market are positive in June

Foreign flows to the stock market are positive by $576 million in June, as $784 million inflows to the futures market outsized $208 million outflows from the spot market (Chart 10).

No changes in FX derivative positions 

Last week, investors maintained their positions in FX derivatives virtually unchanged. Non-residents, banks and institutional investors hold positions of $12.9 billion, $11.7 billion and $ 2.1 billion, respectively (Charts 11, 12, 13 and 14).


 



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