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FX and Capital Markets

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Stable rates in the U.S. boost currencies around the world

September 26, 2016

The U.S. Fed signaled a gradual interest rate hike favoring stocks and currencies around the world.

(full report attached)

Fed decision boosted flows to emerging markets

The U.S. Federal Reserve signaled a gradual interest rate hike, lowering forecasts for interest rates and favoring stocks and currencies around the world. The exchange rate closed the week at 3.24 reais per U.S. dollar, appreciating 0.6% (Charts 1, 2, 3 and 4).

Central bank maintained the pace of reverse swap auctions

The monetary authority maintained the amounts of reverse FX swap daily auctions at $250 million. Another auction was announced to take place today. Currently, the central bank’s short position in FX swap contracts stands at $34 billion (Charts 5 and 6).

Currency inflows in September 

The currency flow is positive by $2.4 billion in September, driven by $1.5 billion trade inflows and $900 million financial inflows (Charts 7 and 8).

A new bond offer abroad last week

A Brazilian company issued $500 million in bonds due in 2026. Year-to-date, Brazilian issuances abroad total $16 billion vs. $8 billion in 2015 (Chart 9 and table).

Foreign flows to the stock market are negative 

Foreign flows to the stock market are negative by $266 million in September, as $462 million outflows from the spot market outsized $197 million inflows to the futures market (Chart 10).

Non-residents reduced their positions in dollar futures

Non-residents reduced their long positions in dollar futures by $3 billion, while institutional investors increased their short positions in cupom cambial by $900 million. Non-residents, banks and institutional investors hold positions of $16 billion, $34 billion and $ -4.8 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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