Itaú BBA - Currency flow remains positive

FX and Capital Markets

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Currency flow remains positive

April 27, 2015

The real kept last week the upward trend, moving below the level of 3.00 reais per dollar.

(full report attached)

Brazilian currency maintained the good performance of the previous weeks.

The real kept last week the upward trend, moving below the level of 3.00 reais per dollar. The international and domestic scenarios (which included the release of Petrobras’ financial statements) supported the performance of the real, and the currency ended the week at 2.95, an appreciation of 3% from the closing price of the previous week (Charts 1, 2, 3 and 4).

Central bank continued acting in the same way in the foreign exchange market.

The central bank continued to roll over US$ 10.1 billion maturing in May at the pace of 10,600 contracts/day. The full rollover, as previously announced, ensures that the FX swap stock remains constant at US$ 113 billion (Charts 5 and 6).

Currency flow remains positive in April and year-to-date.

The currency flow was positive at US$ 4.4 billion in April. Last week, in particular, financial inflows totaled US$ 2.3 billion while the trade flows, previously close to zero, stood at US$ 1.1 billion. Year-to-date, the currency flow is positive at US$ 9.2 billion (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 total US$ 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 at US$ 2.7 billion, with inflows to both the futures and spot markets (Chart 10).

Foreign investors, institutional investors and banks kept their positions in currency derivatives virtually unchanged.

Last week, non-resident investors, institutional investors and banks maintained their positions in currency derivatives (dollar futures, cupom cambial and FX swaps) virtually unchanged at US$ 38.5 billion, US$ 40.7 billion and US$ 28.8 billion, respectively (Charts 11, 12, 13 and 14).



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