Itaú BBA - Global risk aversion pressures the BRL

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Global risk aversion pressures the BRL

February 15, 2016

Low global growth worries weaken the Brazilian real

(full report attached)

Low global growth worries weaken the Brazilian real

Risk aversion in the global markets put pressure on the Brazilian real, which closed the week at 4.00. During the week, the currency depreciated 2.48%, in line with its peers (Charts 1, 2, 3 and 4).

Central bank continued to roll over FX swap contracts expiring in March

As announced, the monetary authority last week continued to roll over contracts due in March. If the pace of 11,900 contracts per day is sustained, contracts will be fully rolled over for a seventh consecutive month (Charts 5 and 6).

Currency flow was negative in the first week of February

The currency flow was negative by $1 billion in the first week of the month, as $1.4 billion financial outflows outsized $383 million trade inflows (Charts 7 and 8).

No external bond issuance by Brazilian companies last week

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

Foreign flows to the stock market are positive

Foreign flows to the stock market are positive in February, driven by $186 million inflows to the futures market and $38 million inflows to the spot market (Chart 10).

FX derivatives positions were unchanged last week

Investor positions in FX derivatives were virtually unchanged. Non-residents, banks and institutional investors hold positions of $27 billion, $43 billion and $31 billion, respectively (Charts 11, 12, 13 and 14).


 



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