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

Monthly report that analyzes the situation of the Argentine financial system.

Executive summary

Regarding the result in the foreign exchange market in March, the entities’ customers bought USD 928 million and the entities USD 298 million. For its part, the BCRA made net sales of USD 1,154 million and made net payments through the Local Currency Payment System (SML) for USD 52 million.
The “Non-Financial Private Sector” was a net buyer of foreign currency for USD 584 million in the foreign exchange market. Within this group, the “Oilseeds and Cereals” sector was the main sector offering foreign currency, registering net revenues of USD 1,605 million, largely explained by its result under the heading “Goods”. On the other hand, “Real Sector excluding Oilseeds and Cereals” recorded net purchases of USD 1,589 million, mainly explained by the net outflows of the items “Goods” and “Other services and other currents” for USD 1,717 million and USD 405 million, respectively, which were partially offset by net income of USD 625 million for the result of the item “Debt, FDI, portfolio and other operations”.
“Individuals” recorded net expenditures of USD 570 million, mainly for expenses for travel, tickets and other consumption made with cards with non-resident suppliers. It should be noted that around 60% of these card purchases are subsequently paid directly by customers with funds in foreign currency, which reduces the deficit impact of these purchases on the foreign exchange market and international reserves.
In what was the exchange balance of March, the operations of the current account of the exchange balance registered a deficit of USD 1,674 million, explained by net expenditures in the accounts “Services”, “Goods” and “Primary income”, for USD 799 million, USD 456 million and USD 425 million, respectively, partially offset by the net income of the account “Secondary income” for USD 6 million. In turn, the foreign exchange financial account was in deficit of USD 1,892 million in March. This result was explained by the deficits of the “Financial Sector”, the “National Government and BCRA” and “Other Net Movements” of USD 1,210 million, USD 1,053 and USD 78 million, partially offset by the surplus of the “Non-Financial Private Sector” of USD 450 million. The BCRA’s international reserves decreased by USD 3,131 million in March, ending the month at a level of USD 24,986 million.
This result was mainly explained by the settlements of net sales of the BCRA in the foreign exchange market for USD 1,434 million, including the net payments made by the BCRA through the Local Currency Payment System (SML), by the fall in the foreign currency holdings of the entities in the BCRA by USD 1,009 million and by the cancellations of principal and interest on loans from international organizations (excluding the IMF) for USD 689 million.
It should be noted that in April the BCRA began a new phase of the economic program, where the current exchange rate scheme was modified for an exchange rate floating scheme with moving bands, the dollar blend was eliminated, exchange restrictions on individuals were eliminated, and both the distribution of profits to foreign shareholders as of the financial years beginning in 2025 and the terms for the payment of foreign trade operations.
In turn, non-resident investors were authorized to access the free exchange market, without prior agreement, for the repatriation of new investments they make. These investments will require a minimum period of 6 months.
In turn, the BCRA will issue a new series of Bonds for the Reconstruction of a Free Argentina (BOPREAL), this new issuance aims to resolve the retained stocks of dividends and debt services with related entities, and is complemented by the flexibility of flows already implemented in access to the MLC, which covers interest payments for financial debts with related parties and profits corresponding to fiscal years beginning on or after January 1, 2025. The aforementioned phase is also supported by a new extended fund facility (EPF) program agreed with the International Monetary Fund (IMF) for an amount of USD 20,000 million. Of that amount, about USD 15,000 million will be freely available disbursements accrued during 2025. For more information, please refer to the note published by the BCRA here and to Communication “A” 8226.