Brazil Experienced Investor Exodus Similar to Pandemic Panic
Brazil faced a significant outflow of foreign investors in December, according to external sector statistics released this morning by the Central Bank.
These figures provide a clearer understanding of the factors that contributed to the sharp rise in the U.S. dollar last month.
Foreign Investment Outflows
It was already known that the foreign exchange market suffered a capital outflow of $29.242 billion in the financial segment during December. However, the Central Bank has now provided a more detailed breakdown of this currency flow. The most significant factor was the net withdrawal of $14.291 billion in foreign investments previously allocated to Brazil.
This represents a substantial foreign capital outflow. In December of the previous year, the net outflow was only $827 million, and in the same month of 2022, Brazil saw an inflow of $5.861 billion. The capital flight is comparable to the panic that struck global markets during the COVID-19 pandemic in March 2020, when foreign investor outflows totaled $14.854 billion.
During the periods of stress in the currency market, where the Brazilian Real has undergone significant depreciation, Central Bank authorities attributed the financial outflows largely to profit and dividend remittances. However, the newly released data contradict this explanation.
Primary and secondary income remittances—including profits and dividends—amounted to $9.815 billion in December, lower than the $12.661 billion recorded in December 2023 and the $11.014 billion in December 2022. In fact, December 2024 saw the lowest outflow for the month since 2020.
The Good News
Balance of payments data reveal that Brazil recorded a net outflow of $12.617 billion in portfolio investments traded domestically in December. Investment funds and equities saw losses of $8.071 billion, while fixed income securities experienced an outflow of $4.546 billion.
In other words, it was short-term capital that exited the country, whereas long-term capital remained relatively stable. Direct investments, which typically represent more stable, long-term commitments, recorded a solid inflow of $2.765 billion.

