Fears of capital outflows accelerating from recession-hit Brazil pushed the real below the waterline on Thursday, with the currency sliding 2.5 percent and approaching its all-time low against the US dollar set nearly 13 years ago.

The damage was triggered by a credit downgrade of the country to junk status by Standard & Poor’s on Wednesday night as a host of problems engulfed the economy, AFP reported.

The real plumbed a low of R$3.9068 on Thursday, leaving the currency within sight of its October 2002 nadir of R$3.9790 against the dollar.

The real has fallen more than 30 percent against the dollar this year, making it the worst emerging markets performer.

The downgrade by Standard & Poors, one of the main rating agencies, strips Brazil of its investment-grade status and leaves President Dilma Rousseff's government on life support, risking an investor rush for the exits, Reuters has quoted analysts as saying.

With deep recession, the country's first ever deficit budget, a corruption scandal hitting surreal proportions, and political paralysis, S&P didn't have to look far to justify marking Brazil as "speculative" -- its score even lower than Russia's, which faces powerful Western sanctions.

Brazil’s problems are already exacerbated by economic and political problems, including a sizeable capital accounts deficit and the government’s struggle to stick to its austerity agenda.

And analysts are warning that more pain may be just around the corner.