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 June.

Main aspects

During June, the BCRA’s international reserves increased by USD 653 million, ending the month with a stock of USD 43,241 million.

Continuing within the context of the COVID-19 pandemic, with impacts on both the level of global and local activity, on trade flows and capital movements, in parallel with the progress in the negotiations for the restructuring of the public external debt and the regulatory modifications implemented through Communication “A” 7030 and its complementary ones, in June, the BCRA and the entities bought USD 664 million and USD 93 million, respectively, in the foreign exchange market, which were sold by the entities’ customers for USD 757 million. Additionally, the monetary authority made sales directly to the National Treasury for USD 159 million.

Companies in the real sector were net sellers of foreign currency for USD 1,785 million.

Within this group, the main sector in terms of historical net sales, “Oilseeds and Cereals”, recorded net revenues of USD 2,165 million, with a reduction of 3% compared to those recorded in the same period of 2019. June’s income level was in line with estimated exports of goods, which would imply that the sector stopped the levels of debt cancellation for advances and pre-financing of exports observed since January 2020. The sector’s level of indebtedness for export financing is at an all-time low.

Companies in the “Real Sector excluding Oilseeds and Cereals” were net buyers in the market with a total of USD 380 million, with a decrease in their net purchases of about USD 1,100 million compared to the average of the previous two months, within the framework of the measures adopted to order the payment of obligations for the import of goods (Communication “A” 7030 and complementary ones).

“Individuals”, who basically buy foreign currency for hoarding, travel and other consumption abroad, bought USD 778 million net (USD 618 million for banknotes and about USD 110 million for travel and other card expenses that fell 72% year-on-year, given the context of border closures due to the COVID-19 pandemic).

“Institutional Investors and Others,” both resident and non-resident, made net purchases in the month of $99 million.

The foreign exchange current account, which includes the net result of foreign exchange operations recorded as net exports of goods and services, and primary and secondary income in line with the definitions of the Balance of Payments, registered a surplus of USD 1,562 million, explained by the net income from “Goods” and “Secondary income”.

The financial account of the “Non-Financial Private Sector” had a deficit of USD 919 million, as a result of the formation of foreign assets and net cancellations of financial debt, partially offset by income linked to investments by non-residents.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a deficit of USD 1,120 million, explained by an increase in the liquid foreign assets of the entities that make up the General Exchange Position (PGC) and by cancellations of financial loans and credit lines.

The operations of the foreign exchange financial account of the “General Government and BCRA” resulted in a surplus of USD 664 million, mainly explained by the entry of loans from international organizations.