Experts Fear Cryptocurrency Outflows May Affect Exchange Rates in Brazil
Analysts believe that, in the future, outflows derived from cryptocurrency purchases could affect the domestic exchange rate in Brazil. The Central Bank of Brazil indicates that crypto assets and recreational services account for $14.7 billion that flowed out of Brazil through August, hinting at the use of virtual assets as payment tools.
Cryptocurrency Outflows Dangerous for the Domestic Brazilian Exchange Rate, Experts Warn
The growth of cryptocurrency adoption has experts worried about the possible pernicious effects of these virtual assets in Brazil. While the amount of cryptocurrency outflows from Brazil is still relatively low and can be offset by other inflows, economists and analysts predict that if these keep growing, they can affect domestic exchange rates in the country.
According to central bank data, outflows from cryptocurrency and recreational services (including betting) reached $14.7 billion between January and August. This growing number also affects the current accounts deficit fueled by a stronger economy and higher import levels. âThe picture is still pretty, but we definitely have a problem,â stressed Mapfre Investimentosâ head of research Luis Afonso Fernandes Lima.
The unpredictability of crypto outflows is of some concern, given these cannot be estimated due to their unpredictable behavior. However, some believe that this rise has to do with crypto being adopted as a payment method by Brazilians. Stablecoins might have a big part in it, given that they have become popular in Brazil with banks that have been requested to conduct exchange operations with stablecoins by their customers.
Nonetheless, some also believe there can be companies abroad experimenting with crypto, given the high numbers reported. Ouribankâs product leader, Pedro Guimaraes, stated:
The amount of cryptocurrency expenses in the capital account is too high for it to be just investors speculating or dollarizing with stablecoins.
Other economists see no problem with these imbalances. LĂvio Ribeiro, partner at BRCG, assesses that these movements can be dangerous only if they are associated with illegal activities.
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