Money flowed out of the eurozone in January as investors based in the bloc bought foreign bonds enthusiastically, data showed on Wednesday. Purchases of foreign bonds accounted for over three quarters of the 31.2 billion euro net outflow of direct and portfolio investment in January, contrasting with a 43.9 billion euro inflow the month before, the European Central Bank said in its balance of payments report. "Net purchases of foreign bonds and notes by euro area residents mainly accounted for the net outflows in combined direct and portfolio investment," the ECB said.
Portfolio investment in bonds and notes fell a net 24.7 billion euros in January, compared with a net gain of 4.9 billion euros the prior month. The data suggest that investors might have shifted money into the dollar at the start of the year, although it was too early to call a trend on the volatile investment flows, Dresdner Kleinwort Wasserstein currency strategist Kamal Sharma said.
"If you look at the balance of payments in the US, there seems to be buying of US Treasuries ... so it could be a portfolio shift," he said.
The euro peaked against the dollar at $1.3667 on December 30 in a month when investors were snapping up European stocks. In January, the euro sank 4.6 percent against the dollar from its record high.
The eurozone's current account also flipped into the red in January, showing a 7.9 billion euro deficit, which mirrored a 7.3 billion euro surplus a month earlier.
The surplus in the goods sector retreated to 0.4 billion euros in January from 7.6 billion euros the prior month.