Informe de Evolución del Mercado de Cambios y Balance Cambiario

This report analyzes the evolution of purchases and sales of foreign currency in the foreign exchange market, corresponding to May.

Main aspects

Inflation in advanced countries has been persistent, and central banks in those countries have continued to raise interest rates and tighten liquidity. This, added to the financial turbulence that began during March, increased recession risks, especially in advanced economies, which had a downward impact on commodity prices, which, in general, registered levels prior to the war between Russia and Ukraine. Added to this international panorama is the drought that has been experienced in the national territory, which has generated a great decrease in the quantity and quality of the exportable product that was expected for the year.

In this way, with the aim of encouraging the commercialization of soybeans, their derivatives and other exportable products produced by regional economies, the National Government instructed on April 10, the reestablishment of the “Export Increase Program” (PIE), where an exchange rate of $300 for every USD 1 was established for income through the exchange market for exports of these products.

In this context, during May, the clients of the entities sold USD 1,365 million in the foreign exchange market. For its part, the BCRA bought USD 1,362 million in the market (purchases for USD 3,469 million within the framework of the “Export Increase Program” and net sales for the rest of the flows for USD 2,107 million), while the entities bought USD 113 million, while the BCRA made net payments through the Local Currency Payment System for USD 110 million.

The “Non-Financial Private Sector” was a net seller of foreign currency for USD 1,476 million in the foreign exchange market. Within this group, the main sector in terms of net sales, “Oilseeds and cereals”, recorded net revenues of USD 4,031 million (in the last month of PIE III for the sector), 6% less than in the same month of 2022, mainly explained by the severe drought that seriously affects agricultural production of the main export products.

The “Real Sector excluding Oilseeds and Cereals” was a net buyer of foreign currency for a total of USD 1,972 million, exhibiting a year-on-year reduction of 32% in its purchases, mainly explained by the lower deficit of the Goods and Services accounts.

“Individuals” netly purchased USD 537 million, mainly for travel expenses and other consumption made with cards with non-resident suppliers (with a net of USD 358 million) and for hoarding (with a net of USD 151 million for ticket purchases).

The “Institutional investors and others” sector, both residents and non-residents, made net purchases in the month for USD 46 million, mainly as net payments for imports of goods. The foreign exchange current account registered a surplus of USD 776 million.

This result was explained by net income from the “Goods” account and the “Secondary Income” account of USD 2,363 million and USD 12 million, respectively, partially offset by the net outflows of transfers for “Primary income” and “Services” for USD 1,169 million and USD 430 million, respectively.

The financial account of the “Non-Financial Private Sector” had a deficit of USD 677 million. This result was explained by the records for the cancellations of balances in foreign currency with local entities for the use of cards with non-resident suppliers for USD 237 million (which do not entail a net demand for foreign currency in the financial account), the records of exchange operations for net transfers abroad for USD 150 million (largely explained by the recording of the counterpart of income for travel and tickets without obligation to settle in the foreign exchange market), net outflows for local financial loans for USD 101 million, net purchases of foreign assets for USD 83 million, net payments of loans from international organizations for USD 83 million and payments of foreign loans and debt securities for USD 81 million, partially offset by foreign direct investment income of USD 54 million.

The operations of the foreign exchange financial account of the “Financial Sector” resulted in a deficit of USD 528 million. This result was explained by the increase of USD 467 million in the liquid foreign assets of the entities that make up the General Exchange Position (PGC), by net payments of financial loans, lines of credit and loans from international organizations for USD 35 million and by the purchase and sale of securities for USD 26 million.

The operations of the foreign exchange financial account of the General Government and BCRA resulted in a deficit of USD 786 million, mainly explained by net debt cancellations.

In May, the BCRA’s international reserves decreased by USD 2,000 million, ending the month at a level of USD 33,001 million. This decrease was mainly explained by the payments of interest and commissions to the International Monetary Fund for about USD 800 million (SDR 592 million), by the fall in the foreign currency holdings of the entities in the BCRA for about USD 1,123 million, the cancellation of principal and interest with international organizations and other financial debt of the National Treasury for USD 904 million. by the fall in the price in US dollars of the assets that make up the reserves by USD 591 million, and by the net payments settled by the BCRA through the Local Currency Payment System, partially offset by the net purchases of the BCRA in the foreign exchange market.