Itaú BBA - BRL - strong performance last week

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BRL - strong performance last week

November 9, 2015

Notwithstanding stronger U.S. payrolls, the Brazilian currency outperformed its peers

(full report attached)

Exchange rate traded around 3.80 reais per U.S. dollar last week

Notwithstanding stronger U.S. payrolls, the Brazilian currency outperformed its peers, appreciating 2.3% and closing the week at 3.77 (Charts 1, 2, 3 and 4).

Central bank began the rollover of FX swap contracts expiring in December and carried out two line auctions

The monetary authority began the rollover of swap contracts due in December at a pace of 12,120 contracts per day. If this pace is sustained, contracts will be fully rolled over for a fourth consecutive month. The central bank also carried out two line auctions of $500 million (Charts 5 and 6).

Currency flow was negative in October

The currency flow was positive in the past week, driven by $ 361 million trade inflows and $315 million financial outflows. However, the flow in October was negative by $3.5 billion (Charts 7 and 8).

No external bond issuance last week

No bonds were issued by Brazilian companies overseas. Year-to-date, issuances add up to $8 billion (Chart 9 and table).

Foreign flows to the stock market are negative

Foreign flows to the stock market are negative by $150 million in November, as $249 million outflows from the futures market outsized $99 million inflows to the spot market (Chart 10).

Investor positions in FX derivatives were virtually unchanged 

Non-residents, banks and institutional investors left their FX derivatives positions virtually unchanged during the week at $28 billion, $54 billion and $24 billion, respectively (Charts 11, 12, 13 and 14).


 



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