Itaú BBA - Central bank boosts interventions in the FX market

FX and Capital Markets

< Back

Central bank boosts interventions in the FX market

April 18, 2016

Central bank offered $24.7 billion in reverse FX swap contracts last week

(full report attached)

BRL strengthened last week

The Brazilian currency closed the week at 3.53 reais per U.S. dollar, appreciating 1.7%, performance in line with its peers (Charts 1, 2, 3 and 4).

Central bank offered $24.7 billion in reverse swap contracts last week

The central bank’s total outstanding swap stock decreased to $76 billion last week from $102 billion in late March (Charts 5 and 6).

Currency flow is positive in April

After two consecutive months of outflows, the currency flow is back to positive territory in April, driven by $200 million financial inflows and $1.3 billion trade inflows, totaling $1.5 billion inflows month-to-date (Charts 7 and 8).

No external bond issuance by Brazilian companies last week

There were no corporate issuances this year. Issuances added up to $8 billion in 2015 (Chart 9 and table).

Foreign flows to the stock market are negative

Foreign flows to the stock market are negative in April, as $314 million outflows from the futures market outsized $170 million inflows to the spot market (Chart 10).

Investors changed their positions in FX derivatives

Non-residents reduced their positions in dollar futures by $505 million. Institutional investors increased their positions in dollar futures by $2.9 billion, while reducing their positions in FX swaps by $4.3 billion. Non-residents, banks and institutional investors hold positions of $25 billion, $52 billion and $19 billion, respectively (Charts 11, 12, 13 and 14).


 


 

 



< Back