Informe de Evolución del Mercado de Cambios y Balance Cambiario

This report analyzes the evolution of purchases and sales of foreign currency in the foreign exchange market, corresponding to the first quarter of 2014.

Main aspects

The operations arranged by the entities authorized to operate in foreign exchange with their customers in the Single and Free Exchange Market (MULC) showed a deficit of US$ 1,505 million in the first quarter of 2014. In the same period of previous years, the result of the MULC was negative by about US$ 600 million in 2013 and positive by about US$ 3,300 million in the first quarter of 2012.

At the end of January of this year, a series of exchange, monetary and fiscal measures were adopted to reverse the negative result of the exchange market. These measures included incentives for local financial investments with the increase in the domestic interest rate, adjustments in the exchange rates operated by the Central Bank, the rehabilitation of access by individuals to the MULC for the purchase of freely available tickets with tax validation, the increase in the percentage applicable to the collection on account of consumption taxes for tourism and travel and tickets abroad, the increase in the tax on high-end vehicles and the reestablishment of limits on the Net Global Position (GNP) in foreign currency of the entities. In this context, operations in the MULC in February were practically balanced and in March they showed a surplus of about US$ 400 million after seven consecutive months without positive results.

Within the framework of the managed floating exchange rate policy, the Central Bank made net purchases in the foreign exchange market for US$ 351 million in the first quarter of 2014. These purchases are explained in the context of a deficit market, basically by the sales of foreign currency holdings of the entities in the BCRA for some US$ 1,800 million from the reestablishment of limits on the active position of the PGN in foreign currency of the entities. Similarly, the entities reversed the position purchased in forward transactions in foreign currency, which stood at about US$ 3,600 million at the end of 2013 and became a sold position of US$ 265 million at the end of March 2014.

The BCRA made net payments for foreign trade operations channeled through the Local Currency Payment System in force with Brazil (SML) and ALADI for US$ 308 million and cancellations of capital and interest services on the public sector’s foreign currency debt for around US$ 1,800 million.

As a result, the BCRA’s international reserves decreased by US$ 3,592 million in the quarter, reaching a stock of US$ 27,007 million at the end of March 2014.

The operations of the current account of the foreign exchange balance resulted in a deficit of US$ 2,103 million in the first quarter of 2014, showing a reduction of about US$ 150 million compared to the deficit result of the same quarter of the previous year.

Net transfers by goods in the foreign exchange balance registered a surplus of US$ 569 million, which implied a fall of about US$ 400 million with respect to the result recorded in the same quarter of 2013.

The oilseeds, oils and cereals sector recorded revenues from export collections of US$ 5,003 million, which implied, after seven consecutive quarters of year-on-year declines, a year-on-year increase of 1%. The rest of the sectors as a whole recorded export collections of US$ 10,130 million, showing a year-on-year decrease of 13%.

Payments for imports of goods from the exchange balance reached US$ 14,564 million, which, with a year-on-year decrease of 7%, represented the lowest value of the last twelve quarters, in a context of administration of purchases and payments abroad.

Operations recorded for services totaled net expenditures of US$ 1,690 million in the first quarter of 2014. The year-on-year reduction in net demand for services was due to lower net expenditures for tourism and travel and tickets of around US$ 700 million from the increase in prices implied by fiscal and exchange rate measures.

For its part, the foreign exchange capital and financial account was in deficit by US$ 1,628 million, showing higher net outflows of about US$ 1,300 million in year-on-year terms.

The capital and financial account of the non-financial private sector registered a deficit of US$ 1,011 million, mainly as a result of net outflows of US$ 678 million due to the formation of specific foreign assets, which were applied to the purchase of residents from foreign investors of companies in the oil sector. Likewise, within the framework of the regulatory modifications at the end of January that eliminated the requirement of prior approval of the BCRA for access to the MULC for the acquisition of foreign currency banknotes from individuals, the formation of freely available foreign assets totaled US$ 324 million. These expenditures were partially offset by net income from investments in the country by non-residents of US$ 202 million.

The capital and financial exchange rate account of the public sector showed net expenditures of US$ 449 million.