Itaú BBA - Central Bank Announced Partial Rollover of FX Swap Contracts

FX and Capital Markets

< Back

Central Bank Announced Partial Rollover of FX Swap Contracts

May 4, 2015

The real interrupted last week the appreciating trend seen in recent weeks

(full report attached)

Brazilian currency interrupted a sequence of appreciations, but remained close to 3.00 reais per U.S. dollar in the last week.

The real interrupted last week the appreciating trend seen in recent weeks, but kept trading at a more appreciated range than in the previous month. It underperformed its peers and ended the week at 3.01, down by 2.1% from the previous week’s closing price (Charts 1, 2, 3 and 4).

Central bank fully rolled over contracts expiring in early May and announced the rollover for June.

The monetary authority concluded the full rollover of $10.1 billion in swap contracts expiring in May. Furthermore, it started to roll over contracts expiring in June at a pace of 8,100 contracts per day. If this pace is sustained until the end of the month, the central bank will roll over 80% of the total batch (Charts 5 and 6).

Weekly currency flow is once again positive.

The currency flow was positive by $1.1 billion in the past week (financial: +$1.5 billion; trade: -$374 million). The flow remained strong in April, with $5.5 billion in inflows, led by a very positive financial figure (Charts 7 and 8).

No new bond issuance overseas in the past week.

Another week passed without any bond issuances in the external market. So far, issuances add up to $400 million year-to-date (Chart 9 and table).

Foreign flows to the stock market remain positive in April.

Foreign flows to the stock market remain positive in April, by $3.5 billion, with inflows to the futures and spot markets (Chart 10).

Foreign investors increased their long FX derivatives positions last week.

During the past week, non-resident investors increased long FX derivatives positions (in dollar futures and cupom cambial as well) to $41.4 billion. Meanwhile, institutional investors and banks reduced their positions to $28.4 billion and $37.6 billion, respectively (Charts 11, 12, 13 and 14).



< Back