According to a survey by the Central Bank, Brazilians living abroad broke a record in sending dollars to the country in 2021. In November, the last updated data on the institution’s website, points out that it was sent to Brazil, by individuals, US$390 million.
That’s more than $100 million compared to November 2020 and 58.5% more than the $246 million sent in November 2019, before the pandemic started. From January to November 2021, remittances totaled more than $3.6 billion.
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The main reason for this growth was the 6.5% devaluation of the Brazilian currency against the dollar. This makes the dollars sent by Brazilians even more valuable. This is what Fipecafi professor and academic superintendent Luciana Maia Campos Machado explains.
“The recent appreciation of the dollar against the real makes the transfer of financial resources to Brazil more attractive. On the 19th, the commercial exchange rate for sale reached R$ 5.49, that is, the dollar rose 31% compared to the pre-pandemic period. With the same amount in dollars, it is possible to buy, or invest, 31% more in reais than was possible in January 2019,” he said.
Also according to the Central Bank, the foreign exchange flow to the country in 2021 had a surplus of US$ 6.134 billion after three consecutive years of deficit.
“The foreign currency is more valued against the real, this is due to the expectation of interest rate hikes in the US and in some European countries. As a result, the Brazilian market becomes more attractive for foreign investment, which ends up having greater purchasing power”, believes lawyer and CEO of Law 360, Martha Carbonell.
Scenario tends and repeats in 2022
At the beginning of 2022, expectations for the US currency are for stability. With an economic recovery sailing in still uncertain seas, the Central Bank’s Focus bulletin forecasts an estimate of R$ 5.60 for the dollar price this year.
The director of International Funds in Brazil, Michael Isaac, however, warns of unrest that could happen due to the elections in October.
“There is a very useful financial market axiom for this question ‘past gain does not mean future gain’, which teaches that we have to be careful with histories, because the economy is sentiment. All indicators point to the trend of investments in dollars in Brazil continuing. The exchange rate, however, is something extremely contextualized by the government of the situation”, he pointed out.
Opposite movement can happen
Even with the expectation that the real will continue to be a cheap currency to invest in in 2022, the opposite movement, of Brazilians taking their money out of the country as a way to protect their assets from an even greater devaluation.
That’s what B&T Câmbio’s international business director Vivian Portella believes.
“Many residents in Brazil are starting to seek to protect part of their assets from the risk of an even greater devaluation of the real in years like these. Exchange pressures on the real are common. So, even with the currency already devalued, we begin to see a trend in the opposite direction. Who has all the assets in Brazil remitting funds abroad. This movement should grow the closer the elections get”, he said.
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