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BRL stable around 3.25

September 5, 2016

During the week of the impeachment and COPOM meeting in Brazil and labor market data in the U.S., the BRL around 3.25

(full report attached)

Stable currency, despite domestic and international events

During the week of the impeachment decision and the central bank’s monetary committee meeting in Brazil and labor market data in the U.S., the exchange rate traded around 3.25 reais per U.S. dollar and closed the week at 3.26, appreciating 0.3% and outperforming its peers (Charts 1, 2, 3 and 4).

Central bank maintains reverse swap auctions

The monetary authority maintained the pace of interventions in the FX market, with reverse swap auctions amounting to $500 million. Currently, the central bank’s short position in FX swap contracts stands at $39 billion. If this pace is sustained, the monetary authority will zero the outstanding amount of FX swaps by year-end (Charts 5 and 6).

Currency outflows in August

The currency flow is negative by $1.2 billion in August, as $3.1 billion financial outflows outsized $1.8 billion trade inflows (Charts 7 and 8).

No Brazilian bond issuance abroad last week

There were no bond offers by Brazilian companies overseas last week. Year-to-date, issuances abroad total $17.7 billion, vs. $8 billion in 2015 (Chart 9 and table).

Foreign flows to the stock market are negative

Foreign flows to the stock market are negative by $421 million in August, as $701 million outflows from the spot market outsized $280 million inflows to the futures market (Chart 10).

Investors changed their positions in FX derivatives

Non-residents reduced their long positions in dollar futures by $2.2 billion, while institutional investors cut their short positions in the same instrument by $3 billion. Institutional investors also reduced their positions in FX swaps by $2.8 billion. Non-residents, banks and institutional investors hold positions of $18 billion, $32 billion and $ -2.7 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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