Itaú BBA - Central bank announces full rollover of FX swaps again

FX and Capital Markets

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Central bank announces full rollover of FX swaps again

November 30, 2015

If this pace is maintained, contracts will be fully rolled over for a fifth consecutive month.

(full report attached)

Exchange rate depreciated during the week and closed at 3.85 reais per U.S. dollar

Domestic uncertainties once again pressured the Brazilian real. The currency weakened 3.3% during the week and underperformed its peers (Charts 1, 2, 3 and 4).

Central bank announced the rollover of FX swaps expiring in January 

The monetary authority concluded the full rollover of contracts due in December, and announced the start of the rollover of contracts due in January at a pace of 11,260 contracts per day. If this pace is maintained, contracts will be fully rolled over for a fifth consecutive month. The central bank also carried two line auctions of up to $500 million and announced auctions of up to $2.75 billion to take place today (Charts 5 and 6).

Currency flow is positive

The currency flow was positive last week, as $187 million trade outflows were offset by $1.2 billion financial inflows. The flow in November is positive by $2.6 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 positive

Foreign flows to the stock market are positive by $278 million, as $125 million outflows from the futures market were outsized by $403 million inflows to the spot market (Chart 10).

Institutional investors increased their positions in dollar futures

Institutional investors increased their long positions in dollar futures by $1.5 billion. The positions of non-residents, banks and institutional investors in other FX derivatives were virtually unchanged during the week, standing at $29 billion, $51 billion and $27 billion, respectively (Charts 11, 12, 13 and 14).


 



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