Itaú BBA - BRL weakened again last week

FX and Capital Markets

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BRL weakened again last week

November 16, 2015

The exchange rate closed at 3.85 reais per U.S. dollar, underperforming its peers

Exchange rate depreciated again, but remains around 3.80 reais per U.S. dollar

Notwithstanding the repatriation bill approval in the Lower House, the Brazilian currency ended the week under pressure. The exchange rate closed at 3.85 reais per U.S. dollar, depreciating 2.1% and underperforming its peers (Charts 1, 2, 3 and 4).

Central bank maintained swap rollovers and carried out line auctions

The monetary authority maintained the rollover of FX 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 up to $500 million (Charts 5 and 6).

Currency flow is positive

The currency flow was positive by $99 million in the first week of November, driven by $305 million in trade outflows and $404 million in financial inflows. (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 positive

Foreign flows to the stock market are positive by $199 million in November, with $99 million inflows to the futures market and $100 million inflows to the spot market (Chart 10).

Investor positions in FX derivatives were virtually unchanged

Non-residents, banks and institutional investors maintained their FX derivatives positions virtually unchanged during the week, at $28 billion, $53 billion and $24 billion, respectively (Charts 11, 12, 13 and 14).


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