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 January.

Main aspects

The domestic and global economy continues to undergo a gradual recovery from the health and economic crisis caused by the COVID-19 pandemic, which impacted both the level of global and local activity, trade flows and capital movements. In recent months, the BCRA has perfected foreign exchange regulations in order to promote a more efficient allocation of foreign currency. In this context, the customers of the entities bought USD 289 million in the foreign exchange market, which were sold by the BCRA for USD 161 million (in addition to the net payments through the Local Currency Payment System for USD 51 million) and by the entities for USD 77 million.

The “Real Sector” was a net seller of foreign currency for USD 568 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 2,573 million, with a year-on-year increase of 26%.

The “Real sector excluding oilseeds and cereals”, on the other hand, was a net buyer for a total of USD 2,005 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 506 million net, basically to meet expenses made with cards for consumption with non-resident suppliers and for treasury, for USD 283 million and USD 184 million, respectively.

The “Institutional investors and others” sector, both residents and non-residents, made net purchases in the month for USD 216 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 471 million. This result was explained by the deficit results of “Primary income” and “Services” of USD 909 million and USD 683 million, respectively, partially offset by net income from “Goods” of USD 1,101 million and “Secondary income” of USD 20 million.

The foreign exchange financial account of the “Non-financial private sector” had a deficit of USD 390 million in the month, highlighting the net cancellations of financial debt for USD 435 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a surplus of USD 79 million, highlighting the decrease of USD 136 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 1,088 million, mainly due to the payment of capital maturities with the International Monetary Fund for USD 714 million and payments to International Organizations and other bilateral organizations for USD 261 million.

In January, the BCRA’s international reserves decreased by USD 2,074 million, ending the month at a level of USD 37,589 million.