Itaú BBA - Exchange rate traded around 3.50 last week

FX and Capital Markets

< Back

Exchange rate traded around 3.50 last week

August 24, 2015

Domestic and international scenarios influenced the currency and the Brazilian real floated around 3.50 reais per U.S. dollar.

(full report attached)

The exchange rate floated around 3.50 reais per U.S. dollar

Despite Senate approval of payroll tax increases, the exchange rate continued to trade on political and economic uncertainties. In the international scenario, risk aversion pressured emerging market currencies. The Brazilian real closed the week at 3.50 reais per dollar, depreciating 0.5% and outperforming its peers (Charts 1, 2, 3 and 4).

Central bank continues full rollover of FX swap contracts

The monetary authority continued to roll over the $10.0 billion in swap contracts expiring in September at a pace of 11,000 contracts per day, meaning that the total batch will be 100% rolled over (Charts 5 and 6).

Currency flow remained positive in the second week of August

The currency flow remained slightly positive in the second week of August, with $415 million in trade inflows and $399 million in financial outflows. Hence, the flow month-to-date is positive by $943 million (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 became negative

Foreign flows to the stock market are negative by $538 million in August, with outflows from both the futures and spot markets (Chart 10).

Foreign and institutional investors reduced their long positions in FX derivatives last week

Non-resident and institutional investors reduced their long positions in FX derivatives in the past week, particularly dollar futures, while banks increased their exposure. These positions stand at $32.4 billion, $21.7 billion and $44.4 billion, respectively (Charts 11, 12, 13 and 14).


 



< Back