Itaú BBA - BRL virtually unchanged in a week of low volatility

FX and Capital Markets

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BRL virtually unchanged in a week of low volatility

August 1, 2016

The exchange rate remained range-bound, trading at 3.25-3.30 reais per U.S.

(full report attached)

Exchange rate closed the week at 3.25

During a week of low volatility, the exchange rate remained range-bound, trading at 3.25-3.30 reais per U.S. dollar. The Brazilian currency appreciated 0.2% during the week, in line with its peers (Charts 1, 2, 3 and 4).

Central bank maintains interventions in the FX market

The monetary authority continued to offer reverse swap contracts last week, carrying out four auctions of $500 million, and another FX credit line auction of up to $3.9 billion. It announced another reverse swap auction of $500 million to be executed today. Currently, the central bank’s short position stands at $53 billion (Charts 5 and 6).

Currency inflows last week 

The currency flow was positive for a second consecutive week, as $1.5 billion trade inflows outsized $325 million financial outflows. For the month, the flow became positive by $576 million (Charts 7 and 8).

No new bond issuance abroad last week

There were no Brazilian issuances overseas last week. In 2016, bond offers total $16.7 billion, vs. $8 billion in 2015 (Chart 9 and table).

Foreign flows to the stock market are positive in July

Foreign flows to the stock market are positive in July, with US$ 1.3 billion inflows to the spot market and $381 million inflows to the futures market (Chart 10).

Investors changed their positions in dollar futures

Non-residents reduced their positions in dollar futures by $2.1 billion, while increasing their positions in cupom cambial by $2.8 billion. Institutional investors expanded their positions in dollar futures by $1.4 billion. Non-residents, banks and institutional investors hold positions of $25 billion, $33 billion and $5 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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