Itaú BBA - Trade-Related and Financial Flows Reversed

FX and Capital Markets

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Trade-Related and Financial Flows Reversed

November 25, 2013

Both trade-related and financial outflows occurred, of USD 1.1 billion and USD 3.3 billion respectively.

(full report attached)

The real remained close to 2.28…

The Brazilian currency appreciated somewhat through the week, although some pressure was seen on Thursday after the U.S. FOMC minutes (Wednesday was a holiday in both Rio and Sao Paulo). However, the currency had some relief afterwards, closing the week near 2.28 per dollar. (Charts 1, 2, 3 and 4)

… and the BCB continued to roll over FX swaps maturing in December.

The BCB sold another USD 4 billion in FX rollover swaps last week, in addition to USD 1.5 billion sold through scheduled swap auctions. The amount of swaps expiring in December now stands at USD 3.1 billion. (Charts 5 and 6)

Flows reversed two weeks ago.

The positive flow outlook for November was reversed two weeks ago, as both trade-related and financial outflows occurred, of USD 1.1 billion and USD 3.3 billion respectively. This change left the month’s overall flows at USD -720 million. (Charts 7 and 8)

No new issuance announcements.

No further issuances were announced last week. (Chart 9 and table)

Flows to the stock market edged down.

In November, flows to the stock market reduced somewhat, to USD 368 million as of last Wednesday. Last week, monthly flows were above USD 500 million. (Chart 10)

Foreigner’s holdings of dollar futures continue to decline.

Foreign exposure in dollar futures continues to decline, standing at USD 8.6 billion long. (Charts 11 and 12)

Outflows in equity and fixed-income funds persist, though lower.

Throughout the five working days until Wednesday, resources kept being withdrawn from funds dedicated to Brazilian assets. Last week, outflows totaled USD 310 million, with outflows of USD 208 million in equity funds. (Charts 13 and 14)



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