Brazil: FX and Capital Markets
Highlights of the Week
Monday, April 15, 2013
Expected Rate Hike Contributes to Appreciate
the Real
Bottom Line
The Brazilian currency strengthens again…
The real appreciated throughout the week, along with most of its peers. The forecast of an
earlier rate hike contributed to this move, and the currency reached 1.97 reais per dollar at
Friday’s market close (Charts 1, 2 and 3).
…despite a quiet week in terms of Central Bank interventions.
The Brazilian Central Bank did not intervene in the currency market last week (Chart 4).
Trade-related flows turn slightly negative.
In the first week of April, both financial and trade-related flows adopted a similar pattern. Both
flows were positive until Thursday (April 4). However, Friday’s flows turned upside down,
generating somewhat positive monthly financial flows and slightly negative trade-related flows.
Offshore issuances resumed this week.
Three companies filed for offshore issuances, leading to a month-to-date balance of $1.7 billion
and beating last month’s levels.
Foreign investors are net short in the stock market.
Foreign investor exposure diminished through April 10. Investors reduced their net exposure by
as much as $314 million on April 4. The net balance for April, as of the last available data, was
negative at $155 million.
Exposure to dollar futures reduced further.
Non-residents continued to shorten their position on dollar futures, to a current exposure of
negative $3 billion. Foreign positions in this derivative were positive two weeks ago, only
recently reversing to a negative status. The “cupom cambial” position remained roughly
unchanged from last week, at negative $4.7 billion.
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FX and Capital Markets
Monday, April 15, 2013
Real: Weekly Evolution
2.005
2.000
1.995
Peer-currencies Weekly
Performance
1
reais
per dollar
MXN; 0.82%
1.992
1.990
1.981
1.980
1.975
1.965
AUD; 1.19%
1.976
1.973
Daily
Trading
Range
1.970
8-Apr
depreciation
BRL; 0.80%
1.970
COP;
0.35%
1.960
9-Apr
10-Apr
11-Apr
12-Apr
-1.50%
-1.00%
Source: Bloomberg and Itaú
*30-day moving st.
dev. of logdifferences
BRL
AUD
JPY
EUR
10
0.50%
4
billion dollars
purchases (+)
5
12
0
10
-5
Swap
Reverse swap
Forward
Spot
8
-10
6
4
Dec-12
-15
Jan-13
Feb-13 Mar-13
Jan-12
Apr-13
May-12
Daily Flows
million dollars
5
Financial
Trade-related
700
Sep-12
sales (-)
Jan-13
Source: BCB and Itaú
Source: Bloomberg and Itaú
1000
0.00%
Central Bank Actions
3
MXN
14
-0.50%
Source: Bloomberg and Itaú
Currencies Volatility*
16
CLP;
0.30%
appreciation
1.985
18
2
10
8
Exchange Rate Flows
billion dollars
Financial**
Trade-related
6
4
400
2
0
100
-2
-200
-4
-6
-500
-8
-10
-800
1-Apr
2-Apr
3-Apr
4-Apr
5-Apr
**services-related and capital flows
Jan-12
May-12
Sep-12
Source: BCB and Itaú
Source: BCB and Itaú
Page 2
6
Jan-13
FX and Capital Markets
Monday, April 15, 2013
Securities Issuances in the External 7
Market
16
billion dollars
14
11.7
12
10
8.4
8
5.5 6.4
6
4
5.8
4.0
2.4 1.32.5
1.5 1.4
2
Jul-12
1.6 1.7
0.2
0.1
0
Jan-12 Apr-12
5.1
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
Source: Valor Econômico
Net Foreign Flows to Brazilian
Equities
3000
2000
8
6
4
million dollars
0
0
-2
-1000
-4
-2000
-6
-3000
-8
-5000
Net Foreigners' Exposure to Currency
Derivatives
9
billion dollars
2
1000
-4000
Value (mill. $)
275
750
700
Maturity
2023
2023
2018
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
Source: BMF Bovespa, Bloomberg e Itaú
Page 3
Apr-13
FX and Capital Markets
Monday, April 15, 2013
Macro Research - Itaú
Ilan Goldfajn – Chief Economist
Tel: +55 11 3708-2696
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