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

Executive summary

In June, the entities’ customers sold USD 460 million in the foreign exchange market, while the entities bought USD 340 million (mainly from the funds received for cancellations of customers’ foreign currency consumption, see Relevant Regulations section) and the National Treasury bought USD 175 million. For its part, the BCRA did not operate in the spot exchange market and made net payments through the Local Currency Payment System (SML) for USD 55 million.
The “Non-Financial Private Sector” was a net seller of foreign currency for USD 110 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 3,640 million, largely explained by its result under the heading “Goods”.

For its part, the “Real Sector excluding Oilseeds and Cereals” recorded net sales of USD 929 million. “Individuals” registered net outflows of USD 4,357 million, mainly due to net purchases of banknotes and foreign currency without specific purposes for USD 4,328 million.
It should be noted that part of the funds acquired and registered in the banknote account are deposited in local accounts or can be used later for the cancellation of consumption with cards in foreign currency and do not necessarily constitute the formation of foreign assets as the final destination of these funds.

Similarly, as for foreign exchange outflows, they can be partly traded later in the stock market and used to cancel foreign liabilities (for example, for payments of foreign commercial or financial debt or profits and dividends).

In addition, net expenditures were recorded for expenses for travel, tickets and other consumption made with cards with non-resident suppliers for USD 720 million (of which 70% would have been paid with funds in foreign currency).
In what was the exchange balance of June, a surplus of USD 2,158 million in June, explained by the net income of the “Goods” account of USD 3,376 million, partially offset by the net
outflows in the accounts “Services”, “Primary income” and “Secondary income” of USD 744 million, USD 465 million and USD 9 million, respectively.

In turn, the foreign exchange financial account was in surplus of USD 745 million in June. This result was explained by the net income of the “National Government and BCRA” and “Other Net Movements” of USD 3,214 million and USD 776 million, respectively, partially offset by the deficits of the “Non-Financial Private Sector” and the “Financial Sector” of USD 2,521 million and USD 725 million, respectively.
The BCRA’s international reserves increased by USD 3,053 million in June, ending the month at a level of USD 39,973 million.

This result was mainly explained by the income of USD 2,000 million to the BCRA for passive pass operations (REPO) with BOPREAL securities, the net capital inflow for public securities for USD 1,161 million (highlighting the placement of BONTES for USD 1,500 million),

and by the increase in the price in U.S. dollars of the assets that make up the reserves by USD 137 million. The aforementioned movements were partially offset by the fall in the foreign currency holdings of the entities in the BCRA by USD 422 million

and for the net payments made by the BCRA through the Local Currency Payment System (SML) for USD 60 million.