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

Report on the Evolution of the Exchange Market and Exchange Balance, June 2024

Executive summary

The world economy is growing at a modest pace, but with favorable prospects. Tight monetary conditions
continue to have an impact, especially on credit and construction markets, while inflation is falling faster than expected, so private sector confidence is strengthening. There is evidence of a divergence in the evolution of the different economies, mainly between the poor performance of the advanced economies of Europe and the strong growth of the United States and some emerging economies.
At the local level, in line with what was decided by the authorities and announced in the monetary and exchange rate policy objectives and plans
for 2024, a zero monetary financing target for the National Treasury was set for 2024. In addition, in May the BCRA continued with the BOPREAL auctions, having already awarded
the total announced for the 3 series, for VN USD 5 billion, VN USD 2 billion and VN USD 3 billion
, respectively. It should be noted that, as of May, participation in the
subscription of BOPREAL was enabled to legal entities that wanted to distribute profits and/or dividends to non-resident shareholders, which totaled about USD 1,682 million.
Regarding the result in the foreign exchange market, in May the clients of the entities sold USD 2,302 million in the foreign exchange market and the entities sold USD 179 million. For its part, the BCRA purchased USD 2,529 million and made net payments through the Local Currency Payment System (SML)
for USD 48 million. In addition, the National Treasury made direct purchases from the BCRA for USD 373
million.
The “Non-Financial Private Sector” was a net seller of foreign currency for USD 2,581 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 2,290 million, largely explained by its result under the heading “Goods”. In turn, the sector “Real Sector excluding Oilseeds and Cereals” recorded net revenues of USD 647 million. “Individuals” netly purchased USD 402 million, mainly for expenses for travel, tickets and other consumption made with cards with non-resident suppliers, with a net purchase result of USD 449 million. The “Institutional Investors and Others” sector, both resident and non-resident, made net sales of USD 46 million.
In May’s exchange balance, the foreign exchange current account registered a surplus of USD 1,161 million, explained by net income in the “Goods” and “Secondary Income” accounts for USD 2,708 million and USD 21 million, partially offset by the deficit in the “Primary Income” and “Services” accounts for USD 1,180 million and USD 388 million. respectively. In turn, the foreign exchange financial account was in deficit of USD 155 million in May, a result that is explained by the deficit of the “Financial Sector” of USD 298 million, partially offset by the surpluses of the “Non-Financial Private Sector”, “Other
Net Movements” and the “National Government and BCRA” of USD 59 million, USD 55 million and USD 29
million. respectively.
The BCRA’s international reserves increased by USD 1,085 million in May, ending the month at a level of USD 28,664 million. This increase was mainly explained by the BCRA’s net purchases in the foreign exchange market, due to the increase in the price in US dollars of the assets that make up the reserves for USD 69 million, partially offset by net interest payments Evolution of the Foreign Exchange Market and Exchange Balance / May 2024 | BCRA |
5 and commissions to the International Monetary Fund for USD 864 million (SDR 653 million), for the fall
in the foreign currency holdings of the entities in the BCRA for USD 267 million, for the net payments of principal and interest to international organizations (excluding the IMF) for USD 205 million, and for the net payments made by the BCRA through the Local Currency Payment System (SML) for USD 50 million.