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 the fourth quarter of 2012.

Main aspects

In the fourth quarter of 2012, the operations in the Single and Free Exchange Market (MULC) of the entities authorized to operate in foreign exchange with their customers showed a surplus of US$ 666 million, which implied an increase of just over US$ 200 million compared to the fourth quarter of the previous year and a significant improvement with respect to the practically balanced result of the third quarter of the year.

Within the framework of the policy of managed floating of the exchange rate and prudential accumulation of international reserves, the Central Bank absorbed the surplus of the foreign exchange market and holdings of financial institutions, totaling net purchases in the foreign exchange market of US$ 1,267 million in the quarter. On the other hand, the operations carried out by the Local Currency System (SML) in force with Brazil, implied a net use of international reserves for about US$ 350 million.

The net purchases in the foreign exchange market allowed the Central Bank to cover part of the payments of capital services and interest on debt in foreign currency of the public sector and BCRA for approximately US$ 3,860 million. In public debt payments, the payment corresponding to the GDP-linked Units of about US$ 2,800 million was highlighted as a result of the growth of the Argentine economy in 2011 above the scenario proposed in the issuance prospectus. At the end of the year, international reserve assets totaled US$ 43,290 million.

The operations of the current account of the exchange balance of the last quarter of the year resulted in a deficit of US$ 3,514 million. The increase in the deficit compared to the same quarter of the previous year basically reflected lower net merchandise revenues and higher net payments for services and interest, effects partially offset by lower earnings and dividends.

Revenues from collections of exports of goods totaled US$ 19,394 million, a level similar to that observed in the fourth quarter of the previous year. The revenues of the export sector of oilseeds, oils and cereals totaled US$ 5,586 million, with a fall of 13% in year-on-year terms, while the rest of the sectors registered record settlements for exports of US$ 13,808 million, an amount 7% higher than the value recorded in the same quarter of 2011. In this regard, it should be recalled that at the end of October 2011, the exceptions that established the free availability of foreign currency for export collections, partially for oil companies and totally for establishments in the mining sector that had fiscal stability, were eliminated. These changes affect the year-on-year comparison of the securities traded by the local exchange market.

Payments for imports of goods recorded in the exchange balance totaled US$ 17,469 million, with a year-on-year increase of 7%, exceeding the value of the formalizations of import clearances registered in the quarter.

For its part, the foreign exchange capital and financial account for the quarter was in surplus of US$ 1,965 million, basically reflecting the increase in foreign currency deposits of financial institutions in the BCRA. Net revenues of the public sector and BCRA and the non-financial private sector (NFPS) also contributed to the surplus. For their part, financial institutions recorded a deficit in their operations of US$ 424 million.