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 third quarter of 2015.

Main aspects

The operations arranged by the entities authorized to operate in foreign exchange with their customers in the Single and Free Exchange Market (MULC) showed a deficit of US$ 4,075 million in the third quarter of 2015.

Net transfers for goods resulted in a deficit of US$ 678 million in the third quarter of 2015, showing a reversal of about US$ 2,700 million compared to the surplus of the same quarter of the previous year.

In a context of falling levels of exports from Latin America and the Caribbean as a result of the generalized fall in the prices of a large part of the region’s export products as well as the slowdown in China and developing countries, Argentina’s main trading partners, revenues from collections of exports of goods totaled US$ 14,603 million in the quarter, which implied a decrease of 17% in year-on-year terms. The oilseeds, oils and cereals sector recorded export revenues of US$ 6,028 million, with a year-on-year drop of 9%. Settlements for export collections of the rest of the sectors totaled US$ 8,575 million, registering a year-on-year decrease of 21%.

Payments for imports of goods were around US$ 15,280 million, which represented a year-on-year decrease of 2%. In the disaggregation by sector, it was observed that while the energy sector registered a 23% year-on-year drop in total payments, the rest of the sectors showed a 4% year-on-year increase.

Other demand factors in the market were net expenditures for tourism and travel and tickets, which reached US$ 2,300 million, and net purchases of tickets for treasury, which totaled about US$ 2,000 million. For both concepts, the outflow rose about US$ 2,200 million in year-on-year terms. Net remittances abroad as income totaled US$ 500 million in the quarter.

On the side of foreign exchange sources of funds, net income from foreign financial debt of about US$ 800 million was recorded in the quarter, highlighting the income from the oil sector for almost US$ 500 million and the disbursements received from international organizations for different public sector programs for about US$ 600 million. Net foreign direct investment inflows were around US$270 million.

The Central Bank made net sales in the foreign exchange market for US$ 3,712 million, which together with payments for foreign trade operations channeled by the Local Currency Payment System (SML) in force with Brazil and by ALADI for US$ 170 million, meant a total of about US$ 3,880 million.

On the other hand, the cancellations of capital and interest services on the foreign currency debt of the public sector totaled US$ 800 million, mainly due to obligations with international organizations and with holders of public securities.

Among the main sources of increase in international reserves, the increase in current accounts in foreign currency at the BCRA and income as a result of the local currency swap agreement between the BCRA and the Central Bank of the People’s Republic of China stood out.

The operations of the current account of the foreign exchange balance showed a deficit of US$ 4,009 million, showing a higher net demand of about US$ 3,600 million compared to the deficit of the third quarter of 2014, basically explained by the reversal in net flows for goods and the higher net demand for services.

The foreign exchange capital and financial account resulted in net income of US$ 3,782 million, mainly as a result of net income from the public sector and BCRA for about US$ 3,300 million and from the financial sector for about US$ 300 million, partially offset by net expenditures from the non-financial private sector (NFPS) for about US$ 2,300 million.

The BCRA’s gross international reserves reached a stock of US$ 33,257 million at the end of September 2015, decreasing by US$ 594 million in the quarter, although increasing by about US$ 5,400 million compared to the end of the same quarter of 2014.