Report on the Evolution of the Foreign Exchange Market and the Foreign Exchange Balance

Executive summary

In August, the BCRA made purchases in the foreign exchange market amounting to USD770 million. In turn, institutions’ clients sold USD480 million in the foreign exchange market, while financial institutions’ sales amounted to USD225 million. The BCRA also made net payments through the Local Currency Payment System for USD65 million.

The “Non-Financial Private Sector” was a net seller of foreign currency in the foreign exchange market (USD369 million). Within this group, the “Oilseeds and Grains” sector was the main supplier with net sales of USD2,933 million, mainly explained by the result in “Goods.” The “Real Sector excluding Oilseeds and Grains” recorded sales of USD918 million, mainly explained by inflows from Debt, FDI and Portfolio.

“Natural Persons” made net purchases of foreign currency for a total of USD3,366 million, mainly explained by purchases of foreign currency banknotes (USD2,463 million), outflows from services and other primary and secondary income (USD515 million) and foreign currency transfers for unspecified purposes (USD469 million). Out of the net purchases of banknotes and transfers of foreign currency for unspecified purposes, approximately USD1,100 million remained deposited in local banks and USD700 million increased the foreign assets’ position, whereas about USD900 million were transferred to financial institutions to pay card expenses recorded under “Services and Other Primary and Secondary Income.”

In terms of the foreign exchange balance for August, the foreign exchange current account recorded a surplus of USD806 million. This result was explained by the net inflows recorded in “Goods” (USD3,176 million), which were partially offset by the net outflows recorded in “Primary Income” (USD1,651 million), “Services” (USD712 million), and “Secondary Income” (USD7 million). In turn, the foreign exchange financial account recorded a deficit of USD1,061 million. This result was explained by the net outflows recorded in the “Non-Financial Private Sector” (USD1,780 million), and in the “Financial Sector” (USD440 million). These outflows were partially offset by the net inflows recorded in the account of the “General Government and the BCRA” (USD622 million) and in “Other Net Transfers” (USD536 million).

During August, BCRA’s international reserves increased USD660 million, totaling USD48,259 million by the end of the month. This change was mainly explained by the purchases of foreign currency in the foreign exchange market by the BCRA (USD770 million), the increase in the US dollar exchange rate of foreign exchange reserves (USD909 million), and net inflows from debt securities (USD62 million). These transfers were partially offset by the payment of interest and charges to the IMF (USD857 million), net outflows of principal and interest from international organizations (USD252 million), net payments made by the BCRA through the Local Currency Payment System (USD64 million), and the fall in institutions’ holdings of foreign currency at the BCRA (USD41 million).