MercoPress. South Atlantic News Agency

July marked the second largest net inflow, in record, of dollars into Brazil: 15.8bn

The Super Real looks down on the US dollar

Brazil registered its second-largest volume of net monthly foreign-exchange inflows on record in July. Net dollar inflows in the month reached 15.83 billion, compared with 2.56 billion in net outflows in June and only 713 million in net inflows in July last year.

The central bank reported Wednesday investment inflows of 9.57 billion in July, while trade-related dollar inflows totaled 6.25 billion.

The biggest one-day movement in the month came on July 11, when the net flow from financial transactions amounted to a surplus of 6.67 billion, almost three times the next-biggest one-day movement in the month.

The surge into the Super Real from the dollar on that day came after the central bank said on the evening of July 8 that banks would have to deposit 60% of the value of their short-dollar positions above 1 billion dollars without any remuneration.

“The central bank imposed a measure that forced banks to reduce their positions rapidly,” said Alfredo Barbutti, an economist at Liquidez Brokerage in Sao Paulo. “That was on a Friday, and on the following Monday the banks acted.”

At the end of the month, Brazil made further policy moves to discourage foreign-investor inflows by anticipating a tax of up to 25% on local short-dollar positions.

With the latest July figures, Brazil has posted year-to-date net dollar inflows of 55.67 billion dollars, well above the 24.4 billion posted in all of 2010.

In addition to the incoming dollar flows in July, Brazil's central bank on Wednesday reported it purchased 6.6 billion in spot-market currency auctions in July to build its foreign reserves.

Brazil's reserves stand at 347.6 billion dollars. The recent debate in the US to extend the debt ceiling revealed that Brazil is the fifth holder of US debt.