Itaú BBA - Trade inflows in April

FX and Capital Markets

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Trade inflows in April

May 9, 2016

After two consecutive months of outflows, the currency flow was positive in April

(full report attached)

International scenario drove the BRL last week

The Brazilian currency weakened early in the week, due to global risk aversion. By the end of the week, however, U.S. labor market figures showed few signs of wage inflation, favoring some emerging-market currencies. Still, the exchange rate closed the week at 3.50 reais per U.S. dollar, depreciating 1.9%, in line with its peers (Charts 1, 2, 3 and 4).

Central bank continues to intervene in the FX market

The monetary authority sold $2.5 billion in reverse FX swap contracts last week, and also carried out a $ 2 billion FX credit line auction (Charts 5 and 6).

Currency inflows in April

After two consecutive months of outflows, the currency flow was positive in April, driven by $498 million financial inflows and $6.0 billion trade inflows, totaling $6.5 billion (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 negative

Foreign flows to the stock market are negative in May, with $64 million outflows from the spot market and $224 million outflows from the futures market (Chart 10).

Investors changed their positions in FX derivatives

Non-residents increased their positions in dollar futures by $11.2 billion, while reducing their positions in cupom cambial by $11.5 billion. Institutional investors reduced their positions in dollar futures by $8.3 billion and FX swaps by $3.8 billion, while increasing their positions in cupom cambial by $11.8 billion. Non-residents, banks and institutional investors hold positions of $21 billion, $42 billion and $19 billion, respectively (Charts 11, 12, 13 and 14).


 

 



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