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

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

Main aspects

The global economy continues to recover, but moderating its pace in the face of the uncertainty associated with the armed conflict between Russia and Ukraine, the restrictions in China due to the resurgence of COVID-19 and the consequent increase in inflation and benchmark interest rates in the world’s main economies. As a result, a strong impact was observed on the financial and commodity markets. In this context, the BCRA improved the exchange regulation in order to promote a more efficient allocation of foreign currency. In April, the entities’ customers sold USD 34 million in the foreign exchange market, while the entities made net sales of USD 95 million, which were purchased by the BCRA for USD 211 million (which, on the other hand, made net payments through the Local Currency Payment System for USD 81 million).

The “Real Sector” was a net seller of foreign currency for USD 840 million. Within this group, the main sector in terms of net sales in the foreign exchange market, “Oilseeds and cereals”, recorded net revenues of USD 3,358 million, with a year-on-year increase of 3%.

The “Real sector excluding Oilseeds and cereals”, on the other hand, was a net buyer for a total of USD 2,518 million, exhibiting a year-on-year increase of 59%. The purchases were mainly intended to make payments for imports of goods and services, and to pay off financial debt.

The “Individuals” bought USD 470 million net, basically to meet expenses made with cards for consumption with non-resident suppliers and for treasury, for USD 301 million and USD 138 million, respectively.

The “Institutional investors and others” sector, both residents and non-residents, made net purchases in the month for USD 223 million.

The foreign exchange current account, which includes net flows from net exports of goods and services and primary and secondary income, registered a surplus of USD 276 million. This result was explained by net income from “Goods” of USD 1,403 million, partially offset by the deficit results of “Services” and “Primary income” of USD 866 million and USD 261 million, respectively.

The foreign exchange financial account of the “Non-financial private sector” had a deficit of USD 431 million in the month, highlighting the records for the cancellations of balances in foreign currency with local entities for the use of cards with non-resident suppliers for USD 237 million (which do not entail a net demand for foreign currency as explained in Section 1). the cancellations of loans abroad and debt securities for USD 54 million, of local financial loans for USD 47 million and with other international organizations for USD 26 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a surplus of USD 439 million, highlighting the fall of USD 460 million in the liquid foreign assets of the entities that make up the General Exchange Position (PGC).

On the other hand, the operations of the foreign exchange financial account of the “General Government and BCRA” resulted in a deficit of USD 760 million, mainly due to capital cancellations with the International Monetary Fund for the equivalent of USD 687 million.

In April, the BCRA’s international reserves decreased by USD 1,131 million, mainly affected by the impact of the fall in the price in US dollars of the assets that compose them by USD 1,087 million, ending the month at a level of USD 42,007 million.