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 October.

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 clients of the entities sold USD 258 million in the foreign exchange market, which were purchased by the BCRA for USD 226 million (in addition to the net payments through the Local Currency Payment System for USD 68 million) and the entities for USD 100 million. Additionally, the National Treasury made direct purchases from the BCRA for USD 212 million.

The real sector was a net seller of foreign currency for USD 916 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 2,411 million, with a year-on-year increase of 83%, in a context of higher international prices of agricultural products.

The “Real Sector excluding Oilseeds and Cereals”, on the other hand, was a net buyer in the foreign exchange market with a total of USD 1,495 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 343 million net, basically for expenses made with cards for consumption with non-resident suppliers and for treasury, for USD 173 million and USD 137 million, respectively, in net terms.

The “Institutional Investors and Others” sector, both resident and non-resident, made net purchases in the month for USD 180 million.

The foreign exchange current account, which includes net flows from net exports of goods and services and primary and secondary income, registered a surplus of USD 557 million. This result was mainly explained by net income from “Goods” of USD 1,375 million, partially offset by net expenditures for “Services” and “Primary income” of USD 595 million and USD 203 million, respectively.

The foreign exchange financial account of the “Non-Financial Private Sector” had a deficit of USD 598 million in the month, highlighting the net cancellations of financial debt for USD 505 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a deficit of USD 31 million, highlighting the increase of USD 95 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 309 million.

In October, the BCRA’s international reserves decreased by USD 94 million, ending the month at a level of USD 42,817 million.