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 March.

Main aspects

The global economy continues to recover, but moderating its pace in the face of the uncertainty associated with the armed conflict between Russia and Ukraine. As a result, a strong impact was observed on the financial and commodity markets. In this context, the BCRA improved the exchange regulation in order to promote a more efficient allocation of foreign currency. In March, the entities’ customers sold USD 287 million in the foreign exchange market, while the entities made net sales of USD 113 million, which were purchased by the BCRA for USD 477 million (in addition to the net payments through the Local Currency Payment System for USD 77 million).

In March, an agreement was reached with the International Monetary Fund (IMF) within the framework of an Extended Facilities Program (EPP) to refinance the debt assumed by the Argentine Republic in the Stand By agreement signed in June 2018, in accordance with current legislation.12 In this context, gross disbursements of the organization were recorded in March USD 9,651 million. of which they were used to pay maturities and commissions with the agency itself for USD 2,778 million and USD 121 million, respectively, resulting in net income of USD 6,752 million (valued in USD/SDR at the current pass rate). These operations allowed the BCRA’s international reserves to increase by USD 6,120 million, ending the month at a level of USD 43,137 million.

The “Real Sector” was a net seller of foreign currency for USD 1,185 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 3,595 million, with a year-on-year increase of 13%.

The “Real sector excluding Oilseeds and cereals”, on the other hand, was a net buyer for a total of USD 2,409 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 537 million net, basically to meet expenses made with cards for consumption with non-resident suppliers and for treasury, for USD 323 million and USD 165 million, respectively.

The “Institutional investors and others” sector, both resident and non-resident, made net purchases in the month for USD 205 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 486 million. This result was explained by the net income from “Goods” of USD 1,853 million, partially offset by the deficit results of “Services”, “Primary income” and “Secondary income” of USD 1,040 million, USD 314 million and USD 12 million, respectively.

The foreign exchange financial account of the “Non-financial private sector” had a deficit of USD 586 million in the month, highlighting the net cancellations of financial debt and loans from other International Organizations for USD 252 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a deficit of USD 353 million, highlighting the increase of USD 317 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 surplus of USD 6,738 million, mainly due to the net disbursements of the International Monetary Fund for USD 6,873 million within the framework of the signing of the Extended Facilities Program.