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

Executive Summary

In June, the BCRA made purchases in the foreign exchange market amounting to USD1,418 million, involving USD946 million from financial institutions, and USD419 million from institution’s clients. The BCRA also made net payments through the Local Currency Payment System for USD54 million.

The “Non-Financial Private Sector” was a net seller of foreign currency in the foreign exchange market (USD456 million). Within this group, the “Oilseeds and Grains” sector was the main supplier of foreign currency with net sales of USD2,915 million, mainly explained by the result in “Goods.”

“Natural Persons” made net purchases of foreign currency for a total of USD2,821 million, mainly explained by purchases of foreign currency banknotes (USD2,015 million) and foreign currency transfers for unspecified purposes (USD430 million). In turn, “Legal Persons” made net sales of foreign currency banknotes (USD223 million) and foreign currency transfers for unspecified purposes (USD157 million). Out of the net purchases of banknotes and foreign currency for unspecified purposes, approximately USD800 million remained deposited in local banks and USD500 million increased the foreign assets’ position, whereas about USD700 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 June, the foreign exchange current account recorded a surplus of USD857 million. This result was explained by the net inflows recorded in “Goods” (USD3,018 million) and “Secondary Income” (USD33 million), which were partially offset by the net outflows recorded in “Primary Income” (USD1,567 million) and “Services” (USD627 million). In June, the foreign exchange financial account recorded a deficit of USD3,191 million. This result was attributed to the net outflows recorded in the “Financial Sector” (USD2,455 million), the “Non-Financial Private Sector” (USD1,068 million) and the “General Government and the BCRA” (USD1,006 million). These records were partially offset by net inflows from “Other Net Transfers” (USD1,338 million).

During June, BCRA’s international reserves fell USD3,323 million, totaling USD44,870 million by the end of the month. This change was explained by a fall in institutions’ holdings of foreign currency at the BCRA (USD2,330 million), a decrease in the US dollar exchange rate of foreign exchange reserves (USD999 million), net payments of principal and interest to international organizations (USD937 million), payments of principal and interest on BOPREAL bonds (USD1,028 million), and net payments made by the BCRA through the Local Currency Payment System (USD58 million). These transactions were partially offset by the BCRA’s purchases of foreign currency in the foreign exchange market (USD1,418 million) and by inflows from new issuances of Argentine government securities in the local market (USD640 million).