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

Executive summary

In September, the BCRA purchased USD 474 million in the foreign exchange market and the National Treasury purchased approximately USD 28 million. For their part, the institutions’ customers sold USD 409 million in the market and financial institutions sold USD 32 million. Additionally, the BCRA made net payments through the Local Currency Payment System (SML) for USD 61 million.

The “Non-Financial Private Sector” was a net seller of foreign currency in the foreign exchange market (USD 656 million). Within this group, “Oilseeds and Grains” was the main providing sector with net sales of USD 3,313 million, explained mainly by its performance in the goods category. In turn, the “Real Sector excluding Oilseeds and Grains” sold USD 1,157 million, mostly explained by debt inflows and FDI, partially offset by outflows for services and other current transactions.

For their part, “Natural Persons” made net purchases of foreign currency for USD 3,410 million, explained mainly by banknote purchases (USD 2,471 million), outflows for services and other current expenses (USD 668 million), and foreign currency transfers for non-specific purposes (USD 426 million). In turn, “Legal Persons” recorded net sales of banknotes and net inflows from foreign currency transfers for non-specific purposes of USD 237 million and USD 122 million, respectively. It should be noted that, of the net banknote purchases and net foreign currency transfers abroad for non-specific purposes, it is estimated that some USD 800 million were used to cover “Services and other current” expenses made with cards and other account debits, while another USD 800 million remained deposited in local banks and the remaining USD 800 million increased the external asset position.

In the September exchange balance, a current account surplus of USD 1,521 million was recorded, explained by net “Goods” inflows (USD 3,317 million), partially offset by net outflows from the “Services” (USD 1,061 million), “Primary income” (USD 722 million), and “Secondary income” (USD 14 million) accounts. In turn, the exchange financial account showed a deficit of USD 3,185 million in September. This result was explained by net outflows from the “Financial Sector” (USD 1,776 million), the “Non-Financial Private Sector” (USD 1,409 million), and the “General Government and BCRA” (USD 1,306 million). These were partially offset by net inflows from “Other Net Movements” (USD 1,307 million).

The BCRA’s international reserves decreased by USD 2,167 million in September, ending the month at a level of USD 46,092 million. The variation was mainly explained by principal repayments to the IMF (USD 794 million), net outflows of principal, interest, and contributions to other international organizations (USD 808 million), the drop in the US dollar price of the assets that make up the reserves (USD 525 million), the drop in the institutions’ foreign currency holdings at the BCRA (USD 308 million), net payments made by the BCRA through the SML (USD 63 million), and the cancellation of interest on public securities (USD 38 million). These movements were partially offset by foreign currency purchases in the foreign exchange market by the BCRA (USD 474 million) and by foreign currency purchases in the foreign exchange market by the National Treasury (USD 28 million).