Itaú BBA - Emerging-market currencies strengthened against the U.S. dollar last week

FX and Capital Markets

< Back

Emerging-market currencies strengthened against the U.S. dollar last week

November 27, 2017

Emerging-market currencies strengthen against the U.S. dollar and the BRL reaches its strongest level in November

(full report attached)
 

The BRL closed the week at 3.22 reais per dollar, its strongest level in November

The dollar depreciated globally after the minutes of the latest Federal Reserve meeting showed that some officials are concerned with inflation and still-low expectations. The exchange rate closed the week at 3.22 reais per dollar, appreciating 0.8% and performing in line with its peers (Charts 1, 2, 3 and 4).

Central Bank did not intervene in the FX market

The monetary authority did not intervene in the FX market last week. Its stock of FX swaps now stands at $24 billion (Charts 5 and 6).

Currency inflows last week 

After two weeks of outflows, the currency flow was positive last week, as $1.6 billion financial inflows outsized $227 million trade outflows. Month-to-date, however, the flow remains negative, by $2.0 billion (Charts 7 and 8).

No external bond issuances last week 

There were no bond issuances abroad by Brazilian companies last week. Brazilian bond offerings total $27.1 billion in the year through November, topping the $20.4 billion issued during 2016 as a whole (Chart 9 and table).   

Foreign flows to the stock market are negative in November

Foreign flows to the stock market are negative by $399 million month-to-date, as US$ 872 million outflows from the spot market outsized $474 million inflows to the futures market (Chart 10).

Non-residents reduced their position in dollar futures

Non-residents reduced their position in dollar futures by $2.4 billion, while increasing their position in cupom cambial by $904 million last week. Non-residents, banks and institutional investors hold positions of $15.5 billion, $12.4 billion and $ -4.6 billion, respectively (Charts 11, 12, 13 and 14).


 



< Back