March 25, 2020 / 1:26 PM / 2 months ago

UPDATE 2-Brazil's current account deficit widest in over four years

(Adds central bank comments, forecasts)

By Jamie McGeever

BRASILIA, March 25 (Reuters) - Brazil’s current account deficit widened and financial market outflows accelerated in February, figures showed on Wednesday, highlighting the country’s deteriorating financial position even before any impact from the coronavirus outbreak had been felt.

The current account deficit widened to 2.91% of gross domestic product, the widest since December 2015, while investors pulled more than $3 billion out of Brazilian investment funds, the central bank said.

Including Brazilian stocks traded abroad, the net outflow of $4.4 billion in February was the biggest since October 2008, the central bank said.

The figures reflect the intensifying pressure on Brazil’s currency, which has lost more than 20% of its value against the dollar this year and earlier this month traded at a record low near 5.25 per dollar.

The monthly current account deficit was $3.9 billion, wider than the $3.45 billion shortfall forecast in a Reuters poll, while foreign direct investment was exactly in line with the forecast of $6 billion.

The central bank said it expects the deficit to shrink to $1 billion and net FDI flows to rise to $7 billion in March, but said a full-year deficit and FDI flows forecast will be announced on Thursday in its quarterly inflation report.

A goods trade surplus of $2.5 billion in February was wiped out by a services deficit of $2.6 billion and a primary income deficit of $3.9 billion, the central bank said.

On the portfolio side, a net $4.5 billion was pulled from Brazilian stock funds in February and $1.1 billion was poured into domestic debt securities. This resulted in a net portfolio outflow of $3.4 billion, the central bank said.

That brought net portfolio outflows in the first two months of the year to $1.9 billion, compared with a net inflow $10.7 billion in the same period last year. (Reporting by Jamie McGeever Editing by Bernadette Baum and Paul Simao)

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