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 February.

Main aspects

The global economy continues to recover, but moderating its pace after the new pandemic wave caused by the Omicron variant, added to the uncertainty associated with the armed conflict between Russia and Ukraine. As a result, a major impact was seen 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 February, the entities’ customers bought USD 308 million in the foreign exchange market, while the entities made net purchases for USD 103 million, which were sold by the BCRA for USD 367 million (in addition to the net payments through the Local Currency Payment System for USD 44 million).

The “Real Sector” was a net seller of foreign currency for USD 584 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 2,484 million, with a year-on-year increase of 17%.

The “Real sector excluding oilseeds and cereals”, on the other hand, was a net buyer for a total of USD 1,901 million. The purchases were mainly intended to make payments for imports of goods and services, and to pay off financial debt.

The “Individuals” bought USD 509 million on a net basis, basically to meet expenses made with cards for consumption with non-resident suppliers and for treasury, for USD 289 million and USD 182 million, respectively.

The “Institutional investors and others” sector, both resident and non-resident, made net purchases in the month for USD 201 million.

The foreign exchange current account, which includes net flows from net exports of goods and services and primary and secondary income, registered a deficit of USD 476 million. This result was explained by the deficit results of “Primary income”, “Services” and “Secondary income” of USD 717 million, USD 630 million and USD 35 million respectively, partially offset by net income from “Goods” of USD 906 million.

The foreign exchange financial account of the “Non-financial private sector” had a deficit of USD 481 million in the month, highlighting the net cancellations of financial debt for USD 370 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a surplus of USD 164 million, highlighting the decrease of USD 182 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” were in deficit by USD 187 million, mainly due to the payment of capital maturities with the Paris Club for USD 188 million. In February, the BCRA’s international reserves decreased by USD 572 million, ending the month at a level of USD 37,018 million.