Brazil posts best dollar flow since 2018
A year after Brazil saw the largest dollar outflow for a first half in the Central Bank’s historical series, which began in 1982, the trend has reversed. In 2026, the country posted its strongest first-half currency flow in eight years. Data released Wednesday (8) show net inflows of $17.78 billion through June—a result that over the past decade trails only the $22.5 billion posted in 2018.
The improvement in currency flows coincided with a period of real appreciation, with the exchange rate per U.S. dollar falling to R$5.14 at Wednesday’s close from R$5.48 at the end of 2025. Although Brazil’s exchange rate is largely set in the derivatives market and is only marginally affected by spot dollar inflows and outflows, positive currency flows are seen as giving Brazil’s real more support, since derivatives dynamics tend to be more volatile.
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Central Bank data show a net outflow of $16.12 billion through the financial channel in the first half, more than offset by inflows of $33.9 billion in the trade account. Both metrics improved significantly from the first half of 2025, when the financial account showed an outflow of $39.71 billion and the trade account had inflows of $25.37 billion.
The improvement in currency flows over the past year can therefore be explained by both the financial and trade accounts, “and in particular by the entry of foreign capital into the country, although with some accommodation since the start of the war” in the Middle East, said Júlia Marasca, an economist at Itaú Unibanco.
Trade account
Marasca said exports have been running at record levels since last year, pointing to a structural improvement in the trade balance, mainly through higher oil production. In that sense, the improvement seen in contracted foreign exchange through the trade channel in 2026 follows a recent trend.
“The war had a positive effect in terms of prices, but, on the other hand, it seems to have contributed to a loss of volume, possibly because of weaker global demand, especially from China. With the normalization [of the geopolitical conflict], we should see that demand grow again,” she said.
The strong performance of trade-related currency flows comes even as imports remain “quite high,” reflecting a Brazilian economy that remains resilient, Marasca noted. There was also a gap between shipped foreign exchange—dollars linked to foreign trade—and contracted foreign exchange, or resources actually brought into the country, after the dollar fell to levels near or below R$5 between April and May. That meant part of the flow did not materialize.
“But with the dollar returning to levels of R$5.15 to R$5.20, I expect this larger inflow of dollars through the trade channel to return,” she said.
For Santander economist, Felipe Kotinda, the trade side has improved notably from last year, while financial flows have merely returned to the average of the past five years after a very negative 2025.
“On the financial-account side, we see that direct investment has improved over the past 12 months. Portfolio investment is very volatile, but it is also better than last year,” Kotinda said.
He said foreign-investor flows have been more concentrated in fixed income than in equities. “It is not something that is doing extremely well, but it is within the recent average.”
Commodity prices help
For Kotinda, the main story behind Brazil’s currency flow in 2026 is the rise in commodity prices.
“After several years of depressed commodity prices, there was an increase that helped the trade balance. Oil rose sharply because of the conflict since late February, and the second quarter, in particular, was stronger.”
In recent weeks, as expectations grew that the war between the United States and Iran could end—a prospect now in doubt after attacks resumed—oil returned to levels close to those seen before the conflict. If that continues, trade flows in the coming months should not differ much from the second half of last year, Kotinda projected.
While the trade account appears to show concrete signs of improvement, financial flows point to greater fragility. The smaller outflow from 2025 to 2026 was driven by foreign capital entering through portfolios amid broader allocation diversification by global investors, Itaú’s Marasca said. For her, “the quality of this foreign financing is somewhat worse,” since it is more volatile than foreign direct investment in Brazil.
Second-half outlook
For the second half of the year, a slowdown in dollar inflows into Brazil is natural. Even so, Kotinda expects trade inflows to remain stronger than in recent years, while the financial account should not post outflows as intense as those seen in 2025.
“We have a constructive view of the trade balance. Exports should continue to perform well, and I expect trade flows to be above the historical average for the second half. On the financial side, last year there was the issue of higher taxation, and some companies preferred to bring remittances forward rather than risk paying more. That will not be the case this year, so there should not be such a strong outflow,” he said.
Still, some risks could affect the financial-account balance, especially if the scenario of higher interest rates in the United States materializes. That “reduces the appeal of risk assets, and emerging-market currencies end up suffering,” Marasca said.
Even so, the real’s interest-rate carry remains high relative to the dollar, which could support the Brazilian currency in the short term.
