Perdas com câmbio podem passar de R$30 bi: Losses from exchange-rate swaps could total R$30 billion and affect 200 Brazilian companies, reports O Globo.
You are starting to hear people saying stupid things like “exchange-rate derivatives are the Brazilian version of securitized subprime mortages.”
This, it seems to me, is not just comparing apples to oranges: It’s comparing amoebas to elephants.
Nevertheless, reported losses from bets that the dollar would not go higher than R$1.90 are spooking the herd, there is no denying it.
Estimativa para prejuízos de empresas com operações no mercado futuro é da Fecomércio de São Paulo
Estimate of losses from trading in the futures markets comes from Fecomercio of São Paulo
O tamanho dos prejuízos das empresas brasileiras que apostaram no dólar baixo em operações no mercado futuro intriga entidades empresariais e analistas econômicos. Mas há certo consenso de que as perdas vão muito além das já declaradas por Sadia (R$760 milhões), Aracruz (R$1,95 bilhão) e Votorantim (R$2,2 bilhões). O economista e presidente do Conselho de Planejamento Estratégico da Federação do Comércio de São Paulo (Fecomércio-SP), Paulo Rabello de Castro, disse ontem que pelo menos 200 empresas teriam contratado essas operações e que os prejuízos podem superar R$30 bilhões.
The extent of losses suffered by Brazilian companies that bet on a cheap dollar in the futures markets is a question that puzzles and divides trade associations and economic pundits. But there is a certain consensus forming according to which the losses will extend well beyond those already declared by Sadia (R$760 million), Aracruz (R$1.95 billion) and Votorantim (R$2.2 billion).
This is hardly an earthshaking deduction.
Rabello de Castro, economist and president of the strategic planning council of the Sao Paulo Federation of Commerce said yesterday that at least 200 companies may be holding this sort of futures contract and that the damages could exceed R$30 billion.
- É um número perfeitamente manejável, mas machucou a capacidade de as empresas se enxergarem como uma companhia vencedora – disse Castro.
This is a perfectly manageable sum, but it has undermined the ability of companies to view themselves as winners,” said Castro.
Say what?
As operações acontecem da seguinte forma: um investidor aposta que o dólar vai cair e fecha contratos de venda da moeda a uma determinada cotação. Quando o contrato vence, o comprador é obrigado a pagar o valor acertado, independentemente da cotação com que o dólar está sendo negociado naquele dia. Se estiver abaixo do contrato, ganha quem vendeu e vice-versa. Empresas exportadoras e importadoras costumam usar esse mercado para se protegerem da oscilação da moeda.
These transactions take the following form: An investor bets that the dollar will fall and accordingly buys up options to sell the dollar at a set price. When the contract matures, the buyer is obliged to pay the price agreed upon, regardless of the quotation of the dollar on that date. If it is quoted below the strike price, the seller wins, and vice versa. Exporters and importers often use this market to hedge against currency fluctuations.
I actually think I have improved the original with that translation, through not by much.
The futures market for dummies, according to Globo.
As exportadoras, que têm parte de suas receitas em dólar, costumam ficar na ponta de venda – se o dólar cair demais, garantem determinada receita. Já as importadoras adotam posições de compra – se a moeda subir demais, garantem um teto para as perdas.
Exporters, part of whose revenues are paid in dollars, often take a short position — if the dollar falls too much, they can lock in a fixed amount of revenue. Importers, meanwhile, often take a long position — if the dollar rises too much, they set a fixed limit to their losses.
Losses generally stop at floors, not ceilings (tetos), right?
Quando as empresas assumem posições de venda ou compra além dos seus compromissos, costuma-se dizer que estão “alavancadas”. Ou seja, deixaram de se proteger apenas para apostar em alguma direção, de alta ou de baixa, tornando-se investidores comuns. É nessas horas que aumentam seus riscos.
When companies take long or short positions [over and above their commitments,] they are said to be “leveraged.” That is to say, they are longer just protecting themselves, but are betting on one outcome or another, high or lower, becoming common investors. It is at such moments that they increase their risks?
What? That’s not what leverage is, now, is it?
Leverage is when you invest money you have not got — borrowed or advanced “on margin.”
I have no idea what this write means by além dos seus compromissos. Is that clear to you, my Lusophone friends?
Ricardo Martins, diretor de relações internacionais e de comércio exterior da Fiesp, a federação das indústrias paulistas, não considera que o valor de R$30 bilhões corresponda integralmente a prejuízos, mas ao volume de contratos de câmbio no mercado futuro. Segundo Martins, até poucos meses atrás, as empresas eram muito assediadas pelos bancos com propostas desse tipo de operações.
Ricardo Martins, director of international relations and foreign trade at FIESP, the São Paulo Federation of Manufacturers, does not believe the R$30 billion figure reflects all the losses, but only the volume of contracts in the futures market. According to Martins, until just a few months ago, companies were being pestered mightily by banks with proposals for these types of transactions.
According to my casual reading on the subject, what the banks were pestering companies about were exchange-rate swaps, not futures or forward contracts.
- Em contatos internos (com associados da Fiesp), consideramos que esse valor de R$30 bilhões diz respeito ao total comprometido pelas empresas para se proteger do câmbio, mas não necessariamente a prejuízos – ponderou Martins.
“Judging from internal contacts (with FIESP members), we estimate that this R$30 billion figure reflects the total amount committed by companies to currency hedging, not necessarily to losses,” Martins opined.
Iedi lembra que empresas já ganharam muito com apostas
Iedi recalls that [some] companies have won big on these bets
Para o ex-presidente do Banco Central e economista-chefe do Confederação Nacional do Comércio (CNC), Carlos Thadeu de Freitas, as perdas estimadas por Castro poderiam ter sido reduzidas, caso a autoridade monetária não tivesse demorado tanto em intervir para segurar a disparada do dólar.
In the view of former Central Bank president and head economist at the National Commerce Confederation (CNC) Carlos Thadeu de Freitas, the losses estimated by Castro could have been reduced had the monetary authority not taken so long to intervene to stem the rise of the dollar against the real.
If they indeed have occurred or will occur, Mr. Martins being proven wrong.
If I bump my head later on the stairs, there will have been things I could have done to have avoided it. If I do not, then something I did must account for the fact that I did not, but undoubtedly I still have left something undone that could have prevented my bumping my head in some other way. Quack.
Castro, que também preside a RC Consultores, disse que as empresas que apostaram no mercado futuro erraram duas vezes: fizeram o negócio em mercado de balcão, ou seja, as operações não passaram pela Bolsa de Mercadorias & Futuros (BM&F), e a grande maioria da operações não teve aprovação dos conselhos de administração das companhias.
Castro, who also heads the RC Consultores consulting firm, said that companies who bet in the futures market made a double error: They did the transaction in the over-the-counter market, that is to say, not in the BM&F, and the vast majority of the transactions were not approved by the boards of the companies involved.
Really? Of the 200 companies we are talking about, the vast majority had Nick Leesons doing OTC swaps without board approval? That sounds shocking! I thought good corporate governance was on the rise in Brazil? I might have made that my lede.
- A ausência de um ambiente de Bolsa aumenta muito os níveis de risco. Como foram feitas diretamente com os bancos, muitos dos conselhos de administração só tiveram conhecimento do prejuízo.
“The lack of an exchange environment greatly increases the levels of risk. Since these deals were done directly with banks, many of the boards only learned of them when the losses happened.”
Non sequitur. What is it about doing the deal directly with the counterparty that makes it invisible by its very nature to board members and audit committees?
O ministro do Desenvolvimento, Miguel Jorge, confirmou ontem que entre 220 e 250 companhias brasileiras estariam envolvidas nessas operações e devem ter prejuízos.
Federal Minister of Development Miguel Jorge confirmed yesterday that between 220 and 250 Brazilian companies engaged in these sorts of transactions and are due to report losses from them.
Fecomercio says it is only 200. Who to believe? I will have to see what Jorge said and how he compiled his estimate — a bit of information completely lacking from this report, which only mentions in passing “internal consultations with FIESP members.” How many FIESP members? Consultations of what kind? Was a questionnaire prepared? Who designed it? Can I see it?
Embora reconheça que uma mudança brusca no câmbio implique perdas, o consultor do Iedi, Júlio Gomes de Almeida, avalia que R$30 bilhões é um número exagerado. Segundo ele, essas perdas são relativas, uma vez que as empresas que estão perdendo agora ganharam muito no passado e devem recuperar parte com as exportações a um câmbio mais valorizado.
Although he acknowledges that an abrupt change in exchange rates implies losses, IEDI consultant Julio Gomes de Almeida thinks that R$30 billion is an exaggerated estimate. According to him, these losses are relative, given that companies that are losing now have won big in the past and should recover part of their losses with exports that bring in strong dollars.
Who or what is IEDI and why does what it has to say matter?
- Tem muita gente contabilizando perda, mas houve muitos ganhos nos últimos anos com o dólar baixo – disse.
“There are a lot of people booking losses, but there have been many gains in recent years with the weak dollar,” he said.
Is it just me, or does that write-up make absolutely no sense at all? It’s just a hodgepodge of “he said, she said” in which the reporter has apparently just written down the words without really trying to understand what they mean.
The result is the usual Rashomon effect of conflicting estimates and numbers.
There is no independent effort to evaluate which estimate might be more or less likely. There is no estimate on how the estimates were arrived at.
It’s just your standard Globo gabbling festival of gossip — People magazine journalism applied to matters of great real-world importance.
Filed under: Banking and Brokerage, Derivatives, Financial Services, Journalism, Regulation
