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

Executive summary

In August, the BCRA purchased USD 770 million in the foreign exchange market. For their part, the institutions’ customers sold USD 480 million in the market and financial institutions sold USD 225 million. Additionally, the BCRA made net payments through the Local Currency Payment System (SML) for USD 65 million.

The “Non-Financial Private Sector” was a net seller of foreign currency in the foreign exchange market (USD 369 million). Within this group, “Oilseeds and Grains” was the main supplying sector with net sales of USD 2,933 million, explained mainly by its performance in the “Goods” category. In turn, the “Real Sector excluding Oilseeds and Grains” sold USD 918 million, mostly explained by Debt, FDI, and portfolio inflows.

For their part, “Natural Persons” made net purchases of foreign currency for USD 3,366 million, explained mainly by purchases of banknotes (USD 2,463 million), outflows for services and other current expenses (USD 515 million), and foreign currency transfers for non-specific purposes (USD 469 million). It should be noted that, of the net banknote purchases and foreign currency transfers for non-specific purposes, it is estimated that some USD 1,100 million remained deposited in local banks and USD 700 million increased the position of external assets, while some USD 900 million were delivered to institutions to cover “Services and other current” expenses made with cards.

In the August exchange balance, a surplus of USD 806 million was recorded in the exchange current account. This result was explained by net inflows from “Goods” (USD 3,176 million), partially offset by net outflows from the “Primary income” (USD 1,651 million), “Services” (USD 712 million), and “Secondary income” (USD 7 million) accounts. In turn, the exchange financial account resulted in a deficit of USD 1,061 million. This result was explained by net outflows from the “Non-Financial Private Sector” (USD 1,780 million) and the “Financial Sector” (USD 440 million). These were partially offset by net inflows from the “General Government and BCRA” (USD 622 million) and “Other Net Movements” (USD 536 million).

The BCRA’s international reserves increased by USD 660 million in August, ending the month at a level of USD 48,259 million. The variation was mainly explained by foreign currency purchases in the foreign exchange market by the BCRA (USD 770 million), by the increase in the US dollar price of the assets that make up the reserves (USD 909 million), and by net inflows from debt securities (USD 62 million). These movements were partially offset by the cancellation of interest and charges with the IMF (USD 857 million), by net capital and interest outflows to international organizations (USD 252 million), by net payments made by the BCRA through the SML (USD 64 million), and by the drop in the institutions’ foreign currency holdings at the BCRA (USD 41 million).