Meanwhile, local institutional investors hold a long position in the dollar amounting to $361 million. Throughout January and part of February, loca
Meanwhile, local institutional investors hold a long position in the dollar amounting to $361 million. Throughout January and part of February, local investors were slightly leaning toward betting on a weaker dollar against the real. From the end of last month up until yesterday, Brazilian institutional investors (primarily by funds) fluctuated between being slightly long and short on the dollar against the real.
The long positions in mini dollar futures, dollar futures, swap, and foreign exchange coupon (DDI) are viewed as bets against the appreciation of the real. However, this view might not hold entirely accurate since B3’s data also includes offshore investments, which can be made by domestic investors. Additionally, part of the amount pertains to hedging strategies and not necessarily active bets on the performance of the Brazilian currency.
Moreover, since the ebb in foreign investors’ positions has not been matched by an increase in domestic bets in favor of the real, traders suggest it does not necessarily translate into a generally improved outlook for the Brazilian currency, but rather a possible unwinding of hedging. With the recent increase in the Selic rate (with further hikes widely expected), along with a more constrained exchange coupon due to the rolling of the Central Bank line’s auctions, maintaining long positions in the dollar against the real has become more expensive for investors, discouraging its use as hedge for other investments.
valorinternational.globo.com