Capital Outflows, Global Risk and Exchange Rate

BRAZIL ECONOMICS - Report 11 Oct 2022 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

The Central Bank has finally updated the statistics on currency flows and balance of payments, allowing two important findings. First, there is more than US$ 60 billion in export revenues left abroad, due to exporters’ preferring to invest money abroad rather than repatriate it. Second, over the past 12 months, the net outflow from the fixed-income market has amounted to more than US$ 10 billion.

Since the increase of direct investments has exceeded the outflow of portfolio investments, in the past 12 months the positive balance of the financial and capital account has grown, exceeding the current account deficit and leading to a balance of payments surplus. After explaining these results, we show that in 2022, Brazil has very nearly had a purely floating exchange rate regime, without the Central Bank engaging in buying/selling in the spot and DI-dollar swap markets.

The (extremely volatile) movements of the Real have resulted from shifts of supply and demand in the future and spot currency markets, and it is possible to identify that those movements are partly the consequence of changes in global risk perception. With the world full of risks – economic and geopolitical – and based on the domestic risks due to lack of definition of the fiscal picture, the outlook is for the Real to continue facing pressure to depreciate.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.