Itaú BBA - International scenario drove the Brazilian real last week

FX and Capital Markets

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International scenario drove the Brazilian real last week

July 18, 2016

The international scenario favored flows to emerging markets, strengthening their currencies last week

(full report attached)

Exchange rate closed the week below 3.30

The international scenario favored flows to emerging markets, strengthening their currencies last week. The Brazilian real appreciated 0.6% and closed the week at 3.28 per U.S. dollar, outperforming most of its peers (Charts 1, 2, 3 and 4).

Central bank maintains interventions in the FX market

The monetary authority continued to offer reverse swap contracts last week, with five auctions of $500 million. The central bank also announced an auction of $500 million, to be carried out today. Currently, its short position stands at $57 billion (Charts 5 and 6).

Currency outflows in July

The currency flow was negative in early July. During the month, $2.9 billion financial outflows outsized $1.1 billion trade inflows, totaling $1.7 billion outflows (Charts 7 and 8).

Another bond deal last week 

International markets remain open to Brazilian companies. A sugar and ethanol enterprise issued $150 million in bonds due in 2027 (Chart 9 and table).

Foreign flows to the stock market are positive in July

Foreign flows to the stock market are positive in July, driven by $763 million inflows to the spot market and $90 million inflows to the futures market (Chart 10).

Investors changed their positions in dollar futures

Non-residents increased their positions in dollar futures by $400 million. Meanwhile, institutional investors reduced their positions in dollar futures by $1.5 billion and their FX swap positions by $600 million. Non-residents, banks and institutional investors hold positions of $24 billion, $35 billion and $5 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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