Brazil: FX and Capital Markets
Highlights of the Week
Monday, April 29, 2013
Surge in Trade-Related Flows
Bottom Line
The Brazilian currency appreciated…
Along with its main peers, the Brazilian real appreciated. The biggest movement was on
Wednesday, mainly characterized by flows to equity markets. The exchange rate closed at
2.00 reais per dollar on Friday. (Charts 1, 2 and 3)
…but the BCB stayed out of the markets.
The Brazilian Central Bank did not intervene in the currency market last week. (Chart 4)
Trade-related flows surged…
The astonishing positive flow on Monday (April 15) was driven by exports-related contracts. On
the other hand, financial flows remained negative for most of the week. (Charts 5 and 6)
…and construction companies continued to issue abroad.
Another construction company carried out an issuance this week, leading to a total of $3.7
billion for the month. (Chart 7 and table)
The monthly flows remained negative in the stock market…
Stock-market flows oscillated strongly from April 18 to April 22. The negative pace continued
until Tuesday, yielding a flow of negative $2.1 billion. However, the week’s IPOs partly offset
the negative movement and flows reached roughly negative $600 billion, as of April 24. (Chart
8)
…and in currency derivatives markets.
Foreigners slightly strengthened their short position in dollars, which now stands at negative
$2.9 billion. The “cupom cambial” positioning remained unchanged. (Chart 9)
Fund flows were mixed.
The weekly fund flows were mixed until Wednesday. Equity flows remained negative (-$210
million), sustaining a trend that began early in the year. Fixed income partly offset the
movement, with an inflow of $83 million. (Charts 10 and 11)
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FX and Capital Markets
Monday, April 29, 2013
Real: Weekly Evolution
2.030
2.025
Peer-currencies Weekly
Performance
1
reais
per dollar
MXN; 0.96%
2.023
2.020
2.021
2.010
Daily
Trading
Range
BRL; 0.61%
2.001
1.999
1.995
22-Apr
23-Apr
24-Apr
25-Apr
26-Apr
COP; 0.14%
-1.50%
-1.00%
Source: Bloomberg and Itaú
16
*30-day moving st.
dev. of logdifferences
-0.50%
3
BRL
AUD
JPY
EUR
Central Bank Actions
5
12
0
10
-5
Swap
Reverse swap
Forward
Spot
8
-10
6
Jan-13
Jan-12
Feb-13 Mar-13 Apr-13
Exchange Rate Flows
8
5
Financial**
Trade-related
6
4
2
0
-2
-4
-6
-8
**services-related and capital flows
May-12
Sep-12
May-12
Sep-12
Jan-13
Source: BCB and Itaú
billion dollars
Jan-12
sales (-)
-15
Source: Bloomberg and Itaú
-10
4
purchases (+)
14
10
0.50%
billion dollars
10
MXN
4
Dec-12
0.00%
Source: Bloomberg and Itaú
Currencies Volatility*
18
AUD;
0.01%
appreciation
2.010
2.000
depreciation
CLP; 0.83%
2.015
2.005
2
Jan-13
Daily Flows
4200
3900
3600
3300
3000
2700
2400
2100
1800
1500
1200
900
600
300
-300
-600
million dollars
6
Financial
Trade-related
15-Apr 16-Apr 17-Apr 18-Apr 19-Apr
Source: BCB and Itaú
Source: BCB and Itaú
Page 2
FX and Capital Markets
Monday, April 29, 2013
Securities Issuances in the External 7
Market
16
billion dollars
14
11.7
12
10
8.4
8
5.5 6.4
5.8
6
5.1
4.0
4
3.7
2.4 1.32.5
1.5 1.4
2
0.1
1.6
0.2
0
Jan-12 Apr-12
Jul-12
Oct-12
Jan-13 Apr-13
Source: Valor Econômico and Itaú
April 2013: Issuance Details
Issuer
1
Foodstuff
2
Steel
3
Financial Institution / Private Equity
4
Financial Institution
5
Construction
6
Construction*
7
Construction**
8
Construction
Source: Valor Econômico
Maturity
2023
2023
2018
2016
2025
2018
-
Value (mill. $)
275
750
700
150
550
251
500
500
*in BRL
** Perpetual bond
Net Foreign Flows to Brazilian
Equities
3000
2000
6
2
0
0
-2
-1000
-4
-2000
-6
-3000
-8
-4000
-6000
billion dollars
4
million dollars
1000
-5000
Net Foreigners' Exposure to Currency
Derivatives
8
Apr-12
Jul-12
Dollar futures
"Cupom cambial"
-12
Net exposure
Oct-12
Dec-12
-10
Spot market
Index futures
Oct-12
Jan-13
Apr-13
Source: BMF, Bovespa and Itaú
Feb-13
Apr-13
Source: BMF Bovespa, Bloomberg e Itaú
Page 3
9
FX and Capital Markets
Monday, April 29, 2013
Cumulative Fund Flows
35
150
billion dollars
100
30
25
Weekly Fund Flows
10
million dollars
11
Equity
Fixed income
50
Equity
Fixed income
0
20
-50
15
-100
10
-150
-200
5
-250
0
-300
-5
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
-350
20-Mar 27-Mar 3-Apr 10-Apr 17-Apr 24-Apr
Source: EPFR, Itaú
Source: EPFR, Itaú
Macro Research at Itaú
Ilan Goldfajn – Chief Economist
Tel: +55 11 3708-2696
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