Itaú BBA - Central Bank Announced Rollover of Swap Contracts Expiring in March

FX and Capital Markets

< Back

Central Bank Announced Rollover of Swap Contracts Expiring in March

February 2, 2015

The currency flow was once again positive last week, with $756 million in net inflows.

(full report attached)

The currency weakened last week 

After a few weeks of appreciation, there was a change in the dynamics for the Brazilian real and some of its peer currencies. In Brazil, the poor fiscal result released on Friday added further pressure on the currency. The exchange rate closed the week at 2.68 reais per U.S. dollar, vs. 2.58 in the previous week (Charts 1, 2, 3 and 4).

Central bank announces rollover of contracts expiring in March 

The monetary authority concluded the rollover of contracts due in February and announced the rollover of contracts expiring in March at a pace of 13,000 contracts per day. If this pace is sustained until the end of the month, the central bank will roll over virtually the entire batch ($10.4 billion) due in March (Charts 5 and 6).

Positive currency flow last week

The currency flow was once again positive last week, with $756 million in net inflows. Hence, the currency flow became positive in January, by $662 million (Charts 7 and 8).

No bond issuance overseas

For another week, no new issuance was announced. The last Brazilian bond placement was in November 2014 (Chart 9 and table).

Foreign flows to the stock market became negative again in January

Flows to the stock market are negative by $506 million in January, with outflows from the futures market (Chart 10).

Non-residents increased their long positions in FX derivatives

Non-residents increased their positions in FX derivatives, particularly dollar futures, to $35.9 billion. Meanwhile, banks and institutional investors reduced their positions to $38.8 billion and $32.7 billion, respectively (Charts 11 and 12).

Another week of net outflows from equity and fixed income funds dedicated to Brazil

During the week ended on January 28, there were $80 million in net outflows from both equity and fixed income funds dedicated to Brazil (Charts 13 and 14).



< Back