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 November.

Main aspects

In November, the BCRA made purchases directly from the National Treasury for a total of US$ 850 million. For their part, the rest of the public sector agencies together with banks and other entities sold US$ 545 million and US$ 270 million, respectively, which were bought by private sector clients through the Single and Free Exchange Market (MULC).

Without the BCRA having intervened in a net manner with the entities in the MULC in the last three months, the volume traded in that market totaled US$ 43,787 million, equivalent to a daily operation of almost US$ 2,200 million, registering an increase of 41% compared to the same month of the previous year.

The operations of the current account of the foreign exchange balance were in deficit by US$ 2,713 million, basically as a result of the net outflows from the “Primary income” and “Services” accounts of US$ 1,310 million and US$ 951 million, respectively. In the same vein, operations for “Goods” registered a net outflow of US$ 476 million, as a result of export collections of US$ 4,339 million (year-on-year decrease of 4%) and import payments of US$ 4,815 million (year-on-year increase of 23%).

The operations of the capital and financial account of the foreign exchange balance registered a positive balance of US$ 4,750 million in November, mainly associated with the net income recorded by the “Public Sector and BCRA” for US$ 3,487 and the positive result of the “Other net movements” account for US$ 2,154 million, mainly generated by the increase in local deposits in foreign currency by about US$ 1,900 million.

The capital and financial account of the “Non-Financial Private Sector” (NFPS) registered net outflows of US$ 645 million, reducing net outflows by US$ 280 million compared to the same month in 2016. The main explanations for this variation were the increase in income from non-resident portfolio investments and the reversal of flows from securities trading, partly offset by the increase in the formation of foreign assets by residents.

The operations of the capital and financial account of the “Financial Sector” resulted in net outflows of US$ 245 million, explained by the use of funds for the primary subscription of securities for US$ 307 million and by an increase in the liquid foreign assets of the entities that make up the General Exchange Position (PGC) for US$ 265 million. which were partly offset by net income from financial loans and debt securities of US$ 327 million.

With these movements, the BCRA’s international reserves increased by US$ 2,753 million during the month of November, reaching a maximum peak of US$ 55,004 million on 11/22/17, and closing with a historical record stock for the end of the month of US$ 54,563 million.