Today, the Central Bank of Argentina paid up USD 1 billion in principal corresponding to reverse repo transactions in US dollars carried out with two international banks by the end of July 2016; hence, it paid up all reverse repo transactions with international banks recorded in its balance sheet.
By the end of January 2016, the Central Bank had carried out transactions totaling USD 5 billion so as to have additional liquidity in view of a still uncertain context in international markets. At that time, the stock of international reserves had lowered down to USD 25 billion and the country had to face significant challenges arising from its balance of payments.
The favorable evolution observed in the global scenario for Argentina and the improvement of the Central Bank’s balance sheet led to reduce the total amount of these transactions by 80% at the end of July. In addition, it was possible to carry out new transactions at one of the lowest rates in Argentina’s history.
The improvement observed in the Central Bank’s balance sheet as from July remained steady leading to an additional rise in the stock of international reserves in excess of USD 5 billion, even after paying back significant amounts of foreign liabilities in October.
Although the international context for emerging economies is still uncertain, the Central Bank’s international reserves are currently in excess of USD 12 billion the stock it held at the start of 2016. This allows to continue improving the quality of its balance sheet, to reduce the cost of its foreign liabilities; therefore, remaining resilient enough to trigger, if necessary, any of the different mechanisms it has developed to face potential foreign shocks.
December 12, 2016