Transactions in the Free and Single Foreign Exchange Market … · 2017-07-26 · Transactions in the Free and Single Foreign Exchange Market and Exchange Balance| BCRA | 3 primary

Transactions in the Free and Single Foreign Exchange Market and Exchange Balance| BCRA | 1

Transactions in the Free and Single Foreign Exchange Market (MULC) and Exchange Balance

Overview

Foreign Exchange Transactions and Exchange Balance in May 2017

Banks and other institutions were net sellers of around US$1.4 billion in the Free and Single Foreign Exchange Market (MULC); such amount was mainly accounted for by net purchases by the Central

Bank (BCRA) for US$ 1.1 billion and by its public and private sector clients for US$ 283 million. The National Treasury did not carry out any foreign exchange transaction directly with the BCRA during

the month.

The volume traded in the MULC totaled US$ 42.13 billion (equivalent to around US$ 2 billion on average on a daily basis); this amount set a new maximum in the MULC’s history and recorded a 27%

hike in year-on-year (y.o.y.) terms.

Current account transactions in the exchange balance evidenced a deficit totaling US$ 961 million, resulting from net outflows for the “Primary Income” and “Services” accounts for US$ 1.09 billion

and US$ 762 million, respectively, which were partially offset by net inflows derived from the “Goods” account for US$ 863 million, resulting from the collection on exports for US$ 5.77 billion (4% y.o.y.

drop) and payments for imports for US$ 4.91 billion (4% y.o.y. rise).

The capital and financial account pertaining to the “Non-Financial Private Sector” recorded net outflows totaling US$ 779 million and evidencing a US$ 1.35 billion reversal in relation to net inflows

amounting to US$ 568 million recorded in the same period in 2016, mainly due to a greater outflow for

net purchases of foreign assets and the purchase and sale of securities.

Capital and financial transactions of the financial sector evidenced net inflows totaling US$ 701

million accounted for by a reduction in institutions’ liquid foreign assets making up the Exchange Position (PGC) for US$ 752 million and by debt net inflows for US$ 296 million, which were partially

offset by the use of funds for the primary market underwriting of securities for US$ 347 million.

The foreign exchange capital and financial account of the public sector and the BCRA evidenced a surplus totaling US$ 172 million. Regarding the transactions that accounted for such a surplus, foreign

currency inflows from the National Treasury for the issue of LETES (Treasury Bills), and the BONAR 2037 and 2025 bonds denominated in US dollars for a total of US$ 2.8 billion should be underscored,

which were partially offset by the payment for LETES for US$ 1.6 billion and debt settlements with

international institutions for US$ 1.07 billion, basically related to the agreement executed with the

Paris Club.

As a result of these transactions, international reserves held by the BCRA fell by US$ 2.07 billion over

the month, totaling US$ 46.15 billion by the end of the month.


I. Transactions in the Free and Single Foreign Exchange Market1

In May 2017, banks and other institutions were net sellers of around US$1.4 billion in the Free and Single

Foreign Exchange Market (MULC); such amount was mainly accounted for by net purchases by the Central

Bank (BCRA) for US$ 1.1 billion and by its public and private sector clients for US$ 283 million2. The

National Treasury did not carry out any foreign exchange transaction directly with the BCRA during the month

(see Chart I.1).

0

310

-593

1.383

-1.100

National Treasury Other Pub. Sec. Priv. Sec. Institutions BCRA

Chart I.1 Result of Transactions Broken Down by Sector – May 2017

SALES

PURCHASES

INSTITUTIONS CLIENTS

Mil lionsof dol lars

Clients’ net purchases were accounted for by the net purchase of foreign assets by the non-financial private

sector for US$ 977 million3, the use of institutions’ own funds to carry out transactions with securities— both

1 The Central Bank’s website (www.bcra.gob.ar) contains the different statistical series of the Free and Single Foreign Exchange Market (to access the statistical series, click here), together with an annex broken down by sector and main headings (to access the statistical Annex of the exchange balance, click here ). In addition, it is possible to go over the “Main differences between the balance of payments and the foreign exchange balance” (available in the “Publications & Statistics” section, subsection “Foreign Sector” / “Foreign Exchange Market”, to access the text click here).

2 This result excludes the record of the foreign currency purchase for its delivery to the institution to pay the balance in foreign currency due to the use of credit cards abroad, which was calculated to be at around US$ 380 million in May 2017. These transactions to settle local debts in foreign currency with institutions in the system do not imply a net demand in the entire system, made up by institutions and the Central Bank. The deficit resulting from these expenses was included in the tourism and travels heading upon transferring payments abroad.

3 In the case of foreign assets of the non-financial private sector, the effects arising from regulatory changes that began in December 2015 should be considered, since payments that were previously made for specific headings (goods, services, income, financial transactions, amongst others) might currently be made under the free availability headings without referring to the final use, being included in the foreign exchange capital and financial account. Thus, the comparison based on results from previous periods of each one of such accounts is subject to such factor.

http://www.bcra.gov.ar/

http://www.bcra.gov.ar/Pdfs/PublicacionesEstadisticas/opecames.xls

http://www.bcra.gov.ar/Pdfs/PublicacionesEstadisticas/Anexo.xls

http://www.bcra.gov.ar/Pdfs/PublicacionesEstadisticas/diferencias.pdf


primary market underwritings and for the secondary market— for US$ 770 million, net outflows for services

for around US$ 760 million, basically related to expenses of residents abroad4, and transactions related to

primary and secondary5 income, which recorded a net outflow amounting to US$ 488 million (see Chart I.2).

These transactions were partially offset by net inflows from abroad and the settlement of financial loans and

debt securities for around US$ 1.9 billion, by net inflows from investments by non-residents for US$ 1 billion

and by net inflows derived from goods for US$ 863 million.

In turn, it should also be considered that inflows from abroad may be credited directly to domestic accounts in

foreign currency just like domestic deposits in foreign currency may be transferred directly abroad (by

crediting or debiting the same amount being received or sent, without the existence of a forex transaction

against pesos). These transactions are known as “swaps”6. In May, net transfers from abroad totaling US$ 1.03

billion were recorded, which were mainly accounted for by non-residents’ portfolio income aimed at

underwriting government bonds in foreign currency for US$ 630 million.

863

-758

-488

-977

-769

1.000

-1.035

1.881

-283

Goods Services Primary and

secondary income

non-financial

private sector

external assets

accumulation

Transactions with

securities

Investment of

non-residents

Swaps Financial loans

and others

to Clients

Chart I.2 Free and Single Foreign Exchange Market – May 2017

Mil lions

of dol lars

4 This heading includes transfers to other countries made by institutions to pay for expenses of their clients with cards to purchase goods and services from abroad, regardless of whether such transactions were carried out in person or not.

5 This account includes inflows and outflows for the Primary Income account (profits obtained by institutions as income: interest, earnings, etc.) and the Secondary Income account (current transfers between residents and non-residents, such as personal transfers). As defined in the Balance of Payments Manual, 6th Edition by the International Monetary Fund (IMF).

6 In the case of swaps, there is a record kept with the code of the heading that is being paid/entered and a settlement record for “Debit/credit of foreign currency in domestic accounts for transfers effected from or to other countries”; in this way, the transaction is neutral for the MULC’s result with clients.


Apart from purchases carried out in the forex market, the BCRA made payments for foreign trade transactions

arranged through the Domestic Currency Payment System (Sistema de Pagos en Monedas Locales, “SML”) in

force with Brazil and through ALADI (Latin American Integration Association) for US$ 145 million (see

Chart I.3).

1.100

-145

2.813

-3.321

-2.518

-2.071

BCRA MULC + direct

purchases to the NT

SML and ALADI National Treasury issue of

securities

National Treasury paid to

Int. Org. and securities

Other net movements International Reserves

variation

Chart I.3. Change in BCRA’s International Reserves – May 2017

*Note: Includes, among other operations, changes in the accounts of entities in foreign currency, the performance of reserves, adjustments by exchange rate and Valuation, purchase and sale of securities, transfer of National Treasury accounts that are part of the international reserves and operations of the BCRA.

Mil lions

of dol lars

On the other hand, the National Treasury obtained inflows in foreign currency from the issue of securities for

around US$ 2.8 billion resulting from the issue of Treasury Bills (LETES) for US$ 1.94 billion7 and the

BONAR 2025 and 2037 bonds for a total of US$ 874 million. Furthermore, there were issues of LETES and

BONAR 2025 and 2037 that were not initially recorded on the exchange balance8 and which were

denominated in dollars and underwritten in pesos for an amount equivalent to around US$ 1.45 billion.

In addition, upon the maturity of LETES for US$ 1.6 billion, the National Treasury paid principal and interest

to international organizations and holders of other securities denominated in foreign currency for around US$

1.72 billion; in this regard, the payment of principal and interest made to the Paris Club for a total of US$ 1.22

billion is to be noted.

Finally, a reduction in institutions’ current accounts in dollars with the Central Bank by US$ 3.2 billion during

the month should be underscored; this resulted mainly from sales carried out through the foreign exchange

market, the granting of loans and withdrawals of domestic deposits in foreign currency.

7 Net issues of underwritings within the national public sector.

8 These transactions are not included in the exchange balance upon the time of underwriting as there is no transaction in foreign currency involved at this initial stage. The payment made in foreign currency by the National Treasury is included at the time of maturity.


In view of all these transactions, BCRA’s international reserves went down by US$ 2.07 billion in May, and

stood at around US$ 46.15 billion by the end of the month (see Chart I.4).

Chart I.4. BCRA’s International Reserves

46.146

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

J-03 J-03 J-04 J-04 J-05 J-05 J-06 J-06 J-07 J-07 J-08 J-08 J-09 J-09 J-10 J-10 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17

Mil lions of dol lars

38.000

43.000

48.000

53.000

Ene Feb Mar Abr May

Diary - Year 2017 (h 05.31.17)

At the end of each month

II. Volumes Traded in the Free and Single Foreign Exchange Market (MULC)9

The volume traded in the MULC10 totaled US$ 42.13 billion in May 2017 (equivalent to a daily average of

around US$ 2 billion), setting a new maximum in the MULC’s history and going up 27% y.o.y. (see Chart

II.1). This rise was mainly accounted for by transactions arranged between institutions, which reached their

highest level since late 2008, and between institutions and their clients. Transactions between institutions and

their clients11 carried out in the month under review accounted for 69% of the total traded in the MULC whilst

transactions between institutions and between institutions and the BCRA12 accounted for 28% and 3%,

respectively.

9 The Central Bank’s website contains the quarterly ranking broken down by institution for the volume traded in the MULC with clients (to access the Ranking click here).

10 It includes the volume traded by institutions authorized to carry out foreign exchange transactions with their clients, between authorized institutions and between the latter and the BCRA. It is worth noting that the volume traded between institutions and the BCRA implies the full value of the daily net balance in order to only count foreign exchange transactions against pesos, aiming at removing from the analysis any transactions where there are changes of instrument with no difference as to the exchange rate agreed upon, for example, in the case of swaps.

11 The record for underwriting of Central Bank Bills and swap transactions of clients with other countries that totaled US$1.87 billion in May are excluded from the volume traded by authorized institutions and their clients.

12 Swap transactions between institutions, including those carried out with the BCRA, are recorded as foreign exchange purchase-sale transactions with a change of instrument.

http://www.bcra.gov.ar/Pdfs/PublicacionesEstadisticas/Ranking.xls


0

2.500

5.000

7.500

10.000

12.500

15.000

17.500

20.000

22.500

25.000

27.500

30.000

32.500

35.000

37.500

40.000

42.500

45.000

Jan-10Apr-10 Jul-10 Oct-10Jan-11Apr-11 Jul-11 Oct-11Jan-12Apr-12 Jul-12 Oct-12Jan-13Apr-13 Jul-13 Oct-13Jan-14Apr-14 Jul-14 Oct-14Jan-15Apr-15 Jul-15 Oct-15Jan-16Apr-16 Jul-16 Oct-16Jan-17Apr-17

Chart II.1. Volume Traded in the Forex Market (MULC)

Total volume traded in the MULC

Volume traded between authorized institutions and their clients

Volume traded between authorized institutions

Volume traded between authorized institutions and BCRA

Millons of US$

The volume traded between authorized institutions and their clients totaled US$ 29.25 billion in May 2017, up

29% y.o.y. and reaching a historical maximum for the MULC, which was only surpassed by the level recorded

in December 2016. These transactions were concentrated in a small group of institutions: out of almost 100

institutions that carried out foreign exchange transactions over the month, the first ten authorized institutions

(all banks) accounted for 80% of such transactions.

-

4.000

8.000

12.000

16.000

20.000

24.000

28.000

32.000

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jan-12

Mar-12

May-12

Jul-12 Sep-12

Nov-12

Jan-13

Mar-13

May-13

Jul-13 Sep-13

Nov-13

Jan-14

Mar-14

May-14

Jul-14 Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15 Sep-15

Nov-15

Jan-16

Mar-16

May-16

Jul-16 Sep-16

Nov-16

Jan-17

Mar-17

May-17

Chart II.2. Volume Traded with Clients in the Forex Market and Share per heading

Volume traded between authorized institutions and their clients Goods Services Primary and Secondary Income Capital and financial

Millions of dollarsShare

By analyzing the evolution of the volume traded with clients in May and the share of the main headings within

such volume, a rise in transactions within the “Goods” heading was observed against the month before, which

was largely accounted for by more settlements in the agricultural export sector and a rise in payments effected

by companies related to the energy sector. Nevertheless, when making a y.o.y. comparison, the share of the

“Goods” heading fell from 11 percentage points (p.p) (see Chart II.2) to the benefit of transactions carried out

under the “Capital and Financial Account” heading, which ended the month accounting for 52% of the volume

traded with clients, mainly due to residents’ transactions for external assets and non-residents’ investments.

The distribution of transactions with clients broken down by type of institution was once again led by foreign

private banks, which accounted for 58.2%, followed by national private banks, which represented 32.2%; in

contrast, public banks and foreign exchange firms and brokers accounted for 9.4% and 0.3%, respectively.

Regarding the volume traded with clients considering the currency used, the US dollar remained in first

position against all other currencies, accounting for 96.4% of the total traded while the remaining currencies

used for transactions were distributed as follows: euros (3.3%) and other 44 currencies (0.3%).


Finally, as mentioned before, the volume traded in May between banks and other financial and exchange

institutions authorized to carry out foreign exchange transactions reached its maximum level on record since

October 2008, standing at US$ 11.78 billion, up 30% y.o.y. With respect to the distribution of this total per

type of institution, private banks accounted for 90.9% (51.3% foreign banks and 39.6% national banks), while

the remaining 9.1% was distributed as follows: public banks (8.8%) and foreign exchange firms and brokers

(0.3%).

III) Exchange Balance13

III) a. Exchange Current Account

Current account transactions on the exchange balance evidenced a deficit amounting to US$ 961 million in

May 2017, resulting from net outflows for the “Primary Income” and “Services” accounts of US$ 1.09 billion

and US$ 762 million, respectively, which were partially offset by net inflows recorded in the “Goods” and

“Secondary Income” accounts for US$ 863 million and US$ 33 million, respectively.

When comparing the net outflow observed in the current account in May 2017 against the same month in

2016, it may be seen that the deficit rose by US$ 292 million, mainly due to a lower surplus in the “Goods”

account, which was partly offset by fewer outflows for “Profits and Dividends and Other Income.”

III) a.1. Goods-Related Transfers

Transactions related to goods transfers on the exchange balance exhibited a net inflow of funds amounting to

US$ 863 million in May, resulting from the receipts from exports for US$ 5.77 billion, and the payment of

imports for US$ 4.91 billion (see Chart III.1). This result evidenced a US$ 452 million drop against the US$

1.31 billion surplus recorded in the same month in 2016, due to a fall in inflows for export receipts and a

similar rise in outflows for import payments.

13 The exchange balance includes transactions carried out by institutions with clients through the MULC and those carried out directly with international reserves of the Central Bank recorded in its equity evolution.


-9.000

-7.000

-5.000

-3.000

-1.000

1.000

3.000

5.000

7.000

9.000

-9.000

-7.000

-5.000

-3.000

-1.000

1.000

3.000

5.000

7.000

9.000

Jan-14 May-14 Sept-14 Jan-15 May-15 Sept-15 Jan-16 May-16 Sept-16 Jan-17 May-17

Mill ions of dollars

Chart III.1 Goods-Related Transfers

Payments for goods imports Collectios on goods exports Goods related transfers

-4%

+4%

III) a.1.1. Collections on Goods Exports

The “Oilseeds, Oils, and Grains” sector settled receipts from goods exports for US$ 3.03 billion in May, down

11% y.o.y. (see Chart III.2), evidencing a change rate similar to that recorded for inflows in year-to-date terms

(US$ 11.31 billion) against the same period last year.


+25%

-11%

1,485

1,794 1,741

3,620

3,328

3,013

3,247

1,996

1,509

2,022

1,840

1,786

1,428

1,184

1,399

2,743 2,726

3,284

2,913

1,762

1,3651,381

656

2,134

2,891

1,844

2,039

2,500

3,397

2,443

2,327

2,447

1,9981,937

1,8241,741

2,420

1,412

2,252 2,189

3,035

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17

Mil lionsof dol lars

Chart III.2. Receipts from Exports of Oilseeds and Grains

Advance collections from clients and prefinancing for exports (local and foreign) Rest of export collections

-9%

-18%

Total 2014: 27,382

Total 2015: 22,975

Tota l 2016:

27,387 (y.o.y. +19%)

The y.o.y. drop in the sector’s settlements in May was mainly due to a slow pace in internal purchases of

soybean from the industry and export sector in y.o.y. terms14. It should also be noted that, by the closing date

of this report, the progress observed in the 2016/17 soybean cycle was 3 p.p. behind the figure recorded in the

2012-201515 period.

Regarding the methods used for the sector’s export collections, there were fewer advances and less

prefinancing for exports in May 2017. These collection methods accounted for 42% of the total, while they

represented 74% of the total in the same month in 2016. This drop is related to fewer long-term Export Sworn

Statements16 (Declaración Jurada de Venta de Exportación,“DJVE”), which must pay 90% of export duties, if

any, within five business days following the registration.

DJVEs17 totaled US$ 2.25 billion in May, down 18% y.o.y. (see Chart III.3). This decline was accounted for

by negative changes in terms of volumes (7%) and prices (12%). This drop resulted from fewer sales of

14 Soybean internal purchases at a definite price in late May amounted to 12 million tons against 18 million tons that were purchased in the same period in 2016. It should be noted that the settlement of foreign currencies is mainly related to the purchase of grains which will later be exported, either in the same condition or as processed products following industrial processes.

15 It should be noted that the harvest of the previous year was affected by floods, which significantly delayed the harvest during April.

16 It is worth noting that long-term DJVEs, at 180 calendar days, accounted for 64% of foreign sales records in May 2017 against 73% that was recorded in May 2016. In addition, exporters may choose the special regime entitled “DJVE - 45”, in which case DJVEs shall remain in force for 45 consecutive days after their approval. Therefore, if there were any export duties levied on products, the payment shall be made upon such formalization.

17 DJVEs are sworn statements to which exporters of products of an agricultural origin falling under the scope of Law 21453 are subject. They are published daily by the Coordination and Evaluation of Internal Consumption Subsidies Unit (Unidad de Coordinación y Evaluación de Subsidios


soybean pellets and soybean oil, which amounted to US$ 900 million and US$ 100 million, respectively,

which were partially offset by more sales of soybeans and corn, which totaled $ 500 million.

In turn, collection settlements surpassed exports by US$ 300 million in May, going up US$ 700 million in

year-to-date terms18. It should be underscored that in the aggregate of 2016 up to May, the surplus of

settlements for exports reached US$ 1.8 billion.

1,623

3,959

1,746

3,176

4,444

2,738

1,5091,677

1,386

1,7681,878

1,4111,635

2,010

1,254

2,383

2,918

2,251

2,134

2,891

1,8442,039

2,500

3,397

2,4432,327

2,447

1,998 1,9371,824 1,741

2,420

1,412

2,252 2,189

3,035

1,055

1,854

1,966 1,9962,196

2,893 2,801

2,426

2,866

2,096

1,761 1,8101,943 2,015

1,472

2,047

2,319

2,734

-5%

275%

86%

111%

34%

18%

-53%-44%

-34%

55%60%

108%1%

-49%

-28%

-25%

-34%

-18%19%

102%

56%46%

-9%

25%

-26%-20%

39%

46% 40%

178%-18%

-16%

-23%

10%-12%

-11%

-23%

41%62% 45%

-11%

22%-6%

-11%

23%

-13%

-11% 32%

84% 9%

-25%

3%

6%

-6%

0

1,000

2,000

3,000

4,000

5,000

6,000

Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-17 Aug-17 Sep-17 Oct-16 Nov-16(*) Dec-16(*) Jan-17(*) Feb-17(*) Mar-17(*) Apr-17(*) May-17(*)

Mi l lions of dol lars

Sales (DJVE) + sales of Biodiesel and Soybean pellets shell Collections (MULC) Exports (Customs)

16,06312,671

10,906

Jan-16 to May-16

(*) Exports from November to May are estimated based on shipment information (Source: Ministerio de Agroindustria).

Chart III.3. Sales (DJVEs), Collections (MULC), and Exports (Customs) of the Oilseeds and Grains Sector

10,815 11,30710,586

Jan-17 to May-17

-36% -11% -2%

In turn, receipts from exports of goods from the remaining sectors totaled US$ 2.74 billion in May, up 4%

y.o.y. (see Chart III.4).

al Consumo Interno, “UCESCI”). In order to reflect foreign sales of products of an agricultural origin more accurately, DJVEs considered herein are adjusted taking also into account exports of biodiesel and soybean shells pellets, two products that do not require any DJVE.

18 For the series of exports to be compared to that of settlements by the MULC, the basis for calculation considered is the total value of shipment carried out by a single group of companies classified within the sector as “Oilseeds, Oils, and Grains”. Even though such companies carry out most sales of products of the complex, the evolution does not necessarily match, exactly, that evidenced by exports at a product level.


0%

+8%

05

-7%+31%

+80% -28%

+6%+71%

-38%

0

100

200

300

400

500

600

700

800

Food, Beverage,

and Tobacco

Automobile

Industry

Chemical,

Rubber and

Plastic

Industries

Mining Agriculture,

Livestock, and

Other Primary

Activities

Oil Common

Metals and

Processing

Textile and

tanning

industry

Machinery and

Equipment

Commerce

Mil lions of US$

Chart III.4 Receipts from Goods Exports from the Remaining Sectors (excluding the

Oilseeds and Grains sector)

May 2016: US$ 2.640 millions


y.o.y.: +4%

On a sector-by-sector breakdown, it may be seen that the rise in receipts from goods exports is largely

accounted for by the “Chemical, Rubber and Plastic Industries,” “Agriculture, Livestock, and Other Primary

Activities,” “Oil,” and “Common Metals and Processing” sectors.

The sectors with the highest volume settled, “Food, Beverage, and Tobacco” and the “Automobile Industry”

did not evidence changes in y.o.y. terms.

The main sectors that posted y.o.y. drops include “Mining,” “Machinery and Equipment,” and “Commerce”.

III) a.1.2. Payments for Goods Imports

Payments for goods imports on the exchange balance totaled US$ 4.91 billion in May, up 4%19 y.o.y. At sector

level, “Energy,” “Commerce,” and “Food, Beverage, and Tobacco” were the segments that led the rise (see

Chart III.5). Particularly, the performance observed in the “Energy” sector results mainly from the increase in

outflows for the payment of imports of companies related to the production of oil and its by-products.

19 It should be noted that the schedule established by Communication “A” 5850 that limited payments of commercial debt for either goods or services was repealed on April 21, 2016.


-1%

+10%

-12%

+22% -9%

+45%-7%

+11% +46% +1%

0

100

200

300

400

500

600

700

800

900

1.000

1.100

1.200

1.300

1.400

Automobile

Industry

Energy * Chemical,

Rubber and

Plastic

Industries

Commerce Machinery and

Equipment

Common

Metals and

Processing

Food, Beverage,

and Tobacco

Textile and

tanning

industry

Oilseeds, Oils,

and Grains

Other

Manufacturing

Mil lions of US$

Chart III.5 Payments for Goods Imports per Sector



y.o.y.: +4%

*Energy: includes oil, electricity and gas.

Payments for goods imports from the “Automobile Industry” amounted to US$ 1.28 billion, evidencing a level

similar to that recorded in the same period in 2016.

Thus, by including inflows from the collection on goods exports for US$ 586 million, the “Automobile

Industry” evidenced a deficit in the “Goods” heading for a total of US$ 693 million in May (see Chart III.6);

thus, net payments have amounted to US$ 3.32 billion in year-to-date terms since early 2017, exceeding the

deficit recorded over the same period last year by 31%. All of this took place in a context of increased sales

from automotive terminals to car dealers selling imported vehicles (58% y.o.y. hike), which were partially

offset by a rise in exports of utility vehicles manufactured locally (36% y.o.y increase).

-1.305 -725 -898 -1.138 -1.068 -984 -1.022 -839 -952 -978 -1.010 -1.174 -837 -556 -963 -1.021 -965 -1.121 -1.105 -1.026 -929 -987 -727 -479 -390 -593 -973 -1.310 -1.295 -1.092 -904 -1.112 -1.166 -1.085 -900 -1.072 -1.096 -975 -1.080 -1.076 -1.279

695

549

680

816 792 780 809 723

805 799 774

889

590

425

653 728

595

747 755 699

582

699

564

393 332

235

431 435

585

469

330 407

516 455 451

570 475

296 351

475

586

-610

-176 -218

-321 -276

-204 -213 -116 -147 -178

-236 -285 -248

-132

-310 -293 -370 -374 -350 -327 -346

-287

-162 -86 -58

-358

-541

-875

-710 -623

-574

-705 -651 -630

-450 -501

-620 -679

-728

-601 -693

-2.000

-1.750

-1.500

-1.250

-1.000

-750

-500

-250

0

250

500

750

1.000

1.250

1.500

1.750

2.000

Jan-14 May-14 Sept-14 Jan-15 May-15 Sept-15 Jan-16 May-16 Sept-16 Jan-17 May-17

Mil lions of dollars

Chart III.6 Automobile Sector. Goods-Related Transfers

Collections on goods exports

Payments for goods imports

Goods-related transfers

-

Finally, by analyzing payments for goods imports on the exchange balance based on the method of payment

used, deferred payments did not evidence significant changes in y.o.y. terms, totaling US$ 3.47 billion in the

month under analysis (see Chart III.7). In turn, advances and spot payments amounted to US$ 822 and

US$ 619 million, respectively, evidencing opposite performances (the former posted a 33% hike whilst the

second recorded a 3% decline).


0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

F-02 A-02 F-03 A-03 F-04 A-04 F-05 A-05 F-06 A-06 F-07 A-07 F-08 A-08 F-09 A-09 F-10 A-10 F-11 A-11 F-12 A-12 F-13 A-13 F-14 A-14 F-15 A-15 F-16 A-16 F-17


Chart III.7 Payments for Goods Imports

Deferred Payments for Goods Imports Spot Payments for Goods Imports (FOB)

Advanced Payments for Goods Imports (FOB)

+4%

4.9124.718

III) a.2. Services, Primary Income and Secondary Income

The transactions for services contracted 3% in year-on-year terms and totaled a net outflow of US$ 762

million. This result was accounted for by net outflows for “Tourism, Travels and Tickets” (US$ 887 million)

and for “Freight and Insurance” and “Other Services” for US$ 45 million and US$ 103 million, respectively,

which were partially offset by net inflows from “Business, Professional and Technical Services” for US$ 274

million (see Chart III.8).

-909

-244-377

-786

-762

-1.500

-1.250

-1.000

-750

-500

-250

0

250

500

J-13 M-13 S-13 J-14 M-14 S-14 J-15 M-15 S-15 J-16 M-16 S-16 J-17 M-17

Chart III.8 Net Inflows from Services

Ne t Tourism, Travels and Ticke ts Ne t Bus iness , Profess ional and Technical Services

Freight and Insurance Others ne t

Ne t Services


On the opposite front, the net deficit from “Tourism, Travels and Tickets” went up 39% y.o.y., due to an

increase in outflows that exceeded the rise in inflows (see Chart III.9). In fact, gross outflows totaled US$ 1.04

billion (up 36% y.o.y.), while gross inflows amounted to US$ 153 million (up 22% y.o.y.).


-1500

-1300

-1100

-900

-700

-500

-300

-100

100

300

500Millions of US$

Chart III.9. Services, Tourism, Travels and Tickets

Tourism, Travels and Tickets - Incomes Tourism, Travels and Tickets - Outflows Tourism, Travels and Tickets - Net

In turn, transactions related to primary income recorded a net outflow of US$ 1.09 billion during the month

under analysis (down 11% y.o.y.), and this total is made up by net payments for interest for US$ 795 million,

and for profits, dividends and other income for US$ 300 million.

Regarding payments for interest, the “Public Sector and BCRA” accounted for 85% of net payments, reaching

US$ 674 million; in this sense, interest payments on BONAR 2024 bond for US$ 286 million and payments

under the agreement with the Paris Club for US$ 253 million stand out. In turn, the financial sector and the

non-financial private sector recorded net payments for US$ 95 million and US$ 46 million, respectively.

Lastly, net transfers of profits and dividends through the MULC totaled US$ 291 million in May (see Chart

III.10), involving mainly the payments made by the “Oil Seeds and Grains” sector for US$ 100 million, the

“Paper, Publishing, and Printing” sector for US$ 39 million and the “Financial Sector” for US$ 22 million, all

together accounting for 52% of outflows under this heading (see Chart III.11).


Chart III.10 Transfer of Profits and Dividends

Oil Seeds and Grains 100

Paper, Publishing, and Printing 39

Financial Sector 22 Oil 20 Nonmetallic Mineral Products (Cement,

Ceramics and Others) 19

Transport 14

Others 96

0

200

400

600

800

1.000

1.200

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17

Mil lons of

dol lars

Chart III.11 May 2017 – Total: US$ 309 million

Totales anuales

4.230 4.495 253 1.344 1.316 100 2.996

Lastly, net inflows observed in the “Secondary Income” account totaled US$ 33 million over the month, a level similar to that seen in April and up 18% y.o.y.

III) b. Foreign Exchange Capital and Financial Account

The transactions of the foreign exchange capital and financial account recorded a negative balance of US$ 1.28

billion in May. This deficit was due to the net outflow from the “Non-Financial Private Sector” (SPNF) for

US$ 779 million and to the transactions included under “Other Net Movements” for US$ 1.37 billion20;

especially remarkable was the decrease of institutions’ current accounts with the BCRA mainly associated with

lending and the withdrawal of domestic deposits in foreign currency from the local private and public sectors.

The transactions described in the previous paragraph were partially offset by the surplus of the “Financial

Sector” for US$ 701 million and of the “Public Sector and BCRA” for US$ 172 million.

20 This account is made up by transactions which are not foreign exchange transactions but nevertheless impact on BCRA’s international reserves.


Foreign Exchange Capital and Financial Account

In millons of dollars

Date May-16 Jun-16 Jul-16 Ago-16 Sept-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17

Foreign Exchange Capital and Financial Account -3.199 1.975 2.787 -442 -117 9.285 1.672 3.454 8.031 4.539 765 -1.050 -1.280

Financial sector 23 -163 326 -150 70 -1.786 -1.864 681 966 781 -2 -1.772 701

Non-Financial Private Sector 568 -8 592 -388 -414 -227 -928 1.131 -1.984 -883 -610 -54 -779

Public Sector and BCRA -1.058 1.588 1.378 -529 -294 6.731 -482 324 8.023 2.365 684 -3.013 172

Other Net Movements -2.732 558 492 625 521 4.567 4.946 1.318 1.026 2.276 692 3.789 -1.374

III) b.1. The Non-Financial Private Sector’s Foreign Exchange Capital and Financial Account

In May, the capital and financial account of the “Non-Financial Private Sector” (SPNF) exhibited net outflows

for US$ 779 million (see Chart III.12), evidencing a reversal of US$ 1.35 million against the net inflows for

US$ 568 million of the same period in 2016, which was mainly due to a greater outflow for foreign assets

purchases and the purchase and sale of securities.


8 7

452

1.000

551

654

-583

-977

-58

-1.041

198

-423

568

-779

May 2016 May 2017

Chart III.12 Non-Financial Private Sector’s Capital and Financial Account

Capital account Investments by non-residents

Loans and debt securities Foreign assets

Swap transfers from abroad Securities

Total

Millons of dollars

In May, the net demand for the purchase of foreign assets totaled US$ 977 million, accounted for by the net

purchase of banknotes by clients for US$ 777 million (see Chart III.13) and of foreign currency for no specific

use for US$ 200 million.

In gross terms, purchases of banknotes totaled US$ 2.36 billion and were made by around 745,000 clients

(both natural and legal persons); it is worth noting that the number of clients has gone down for the fifth

consecutive month.

-500

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

-500

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

Feb-02 Dec-02 Oct-03 Ago-04 Jun-05 Apr-06 Feb-07 Dec-07 Oct-08 Ago-09 Jun-10 Apr-11 Feb-12 Dec-12 Oct-13 Ago-14 Jun-15 Apr-16 Feb-17

Chart III.13 Transactions of Banknotes in Foreign Currency by the Non-Financial Private Sector through the MULC*

Net purchases of Banknotes

Sales of

banknotes

Purchases of Banknotes

Millons of dollars

* Excludes operations with specific destination prior to 12.17.15

If the information is broken down to take into account the number of monthly purchases by client (see Chart

III.14), it is observed that 40% of purchases made by clients were for a sum up to US$ 10,000 (down 5 p.p.

against April), 17% between US$ 10,000 and US$ 50,000, 19% between US$ 50,000 and US$ 500,000, 6%

between US$ 500,000 and US$ 2 million, 3% between US$ 2 million and US$ 5 million and the remaining

14% of the total was arranged by clients with monthly purchases exceeding US$ 5 million, resulting in an

increase of their share of 9 p.p. against the figure recorded in April.

In turn, the monthly sales of clients’ banknotes amounted to US$ 1.58 billion in May, the maximum level on

record. In May, 52% of banknote sales concentrated in clients over US$ 2 million.


946

251

411

168

437

220

147

117

79

114

338

710

2.358

1.581

Purcheses Sales

Chart III.14 Freely-available Banknotes in the MULC – May 2017

More than US$ 5 M

Between US$ 2 M and US$ 5 M

Between US$ 500 K and US$ 2

M


K


K

Up to US$ 10 K

Millons of dollars

40%

16%

17%

11%

19%

14%

6%

7%

3%

7%

14%

45%

Purcheses Sales

Share

Unlike the behavior observed in the purchase of banknotes, gross transfers abroad without reporting a specific

use for the funds and totaling US$ 1.17 billion were made by 1,557 clients, mainly belonging to the high-

income segment. The same as in previous months, almost 80% of the outflow of funds without indication of

the final purpose resulted from monthly purchases over US$ 2 million (see Chart III.15). Part of these funds

might have been used for payments of external obligations from the foreign accounts to which they are

transferred.

Instead, transactions related to transfers from abroad were more fragmented if compared to transfers made to

foreign countries (see Chart III.15).


102

331 150

169

123

123

798 350

1.174

973

Compras Ventas

Gráfico III.15 l Divisas de libre disponibilidad en el MULC - Mayo de 2017

más de US$ 5 millones

Entre US$ 2 millones y US$5 millones

Entre US$ 500 mil y US$ 2millones

Hasta US$ 500 mil

9%

34%13%

17%

11%

13%

68%

36%

Compras Ventas

Millones de dólares

On the other hand, there were net inflows of loans and debt securities from abroad for US$ 590 million and

settlements of domestic loans for US$ 430 million21. On a sector-by-sector basis, debt net inflows of the “Oil”

sector for US$ 554 million, the “Chemical, Rubber and Plastic Industries” for US$ 60 million, and the

“Commerce” and “Construction” sectors for US$ 55 million each should be especially noted.

With reference to investments by non-residents, there were net inflows for US$ 1 billion, as a result of

portfolio investments for US$ 878 million and direct investment for US$ 122 million. Consequently, non-

residents’ investments rose by US$ 548 million in net terms against the same month in 2016, due to the

increase of portfolio investments, which were partially offset by a slower pace in direct investments (see Chart

III.16 and III.17).

21 Excluding the purchase of foreign currency by clients to be delivered to the institution to pay the balance in foreign currency due to the use of credit cards abroad, which was calculated to be at around US$ 380 million in May 2017.


-800

-600

-400

-200

0

200

400

600

800

Jan-14 Jan-15 Jan-16 Jun-17

Millons

of dollars

Título del eje

Chart III.16 Non-Residents Investments – Direct

Direct Investments, inflows Direct Investments, outflows Net Direct Investments

-1.500

-1.250

-1.000

-750

-500

-250

0

250

500

750

1.000

1.250

1.500

Jan-14 Jan-15 Jan-16 Jun-17

Millons

of dollars

Título del eje

Chart III.17. Non-Residents Investments – Portfolio

Portfolio investments, inflows Portfolio investments, outflows Net portfolio investments

However, it should be noted that the inflows from non-residents’ portfolio investments corresponding to May

were mainly related to investments denominated in dollars (US$ 630 million), as a result of which the effect on

the foreign exchange market was neutral. Consequently, the inflows from non-residents’ portfolio investments

in pesos stood at around US$ 250 million, up US$ 100 million against the figure recorded in April and down

US$ 290 million against the record-high figure of March 2017 (US$ 540 million).

In turn, gross inflows related to direct investment from non-residents of the Non-Financial Private Sector

totaled US$ 143 million, and the main beneficiaries of these funds were the “Oil” sector, with US$ 38 million,

and the “Non-Metal Mineral Products (Cements, Ceramics and Other)” for US$ 32 million (see Chart III.20).


38

32

108

4

51

Chart III.18 Foreign Direct Investment. Share by Sector in InflowsTotal May 2017: US$ 143 millons

Oil

Nonmetallic Mineral Products (Cement, Ceramicsand Others)

Commerce

Chemical, Rubber and Plastic Industry

Agriculture, Livestock and Other Primary Activities

Others

Lastly, there were net foreign currency outflows for the operation with financial entities’ securities22 for US$ 423 million, evidencing a reversal of US$ 620 million against the inflows of the same month in 2016.

III) b.2. Financial Sector’s Foreign Exchange Capital and Financial Account

In May 2017, the capital and financial transactions of the financial sector evidenced net inflows totaling US$

701 million, mainly accounted for by a reduction in liquid external assets of entities making up the Exchange

Position (PGC) for US$ 752 million and by the net debt inflows for US$ 296 million, which were partially

offset by the use of funds for the primary market underwriting of securities for US$ 347 million.

Financial institutions’ PGC stock reached US$ 2.93 billion as of May 31, 2017 (see Chart III.19). It is worth

mentioning that Communication “A” 6237 became effective on May 4, 2017, stating that the institutions

authorized to make foreign currency transactions may freely determine the level and use of their liquid external

22 In the MULC, transactions are recorded under the name of the institution. The net effect of these transactions has, as counterpart, non-financial private sector’s residents, or non-residents. For this reason, they are posted in the foreign exchange capital and financial account of the non-financial private sector.


assets in foreign currency (PGC). However, institutions are still subject to the limits established for the Net

Global Position in Foreign Currency (PGNME) 23.

The holdings by the institutions of banknotes in foreign currency totaled US$ 1.53 billion by late May,

accounting for 52% of the PGC’s total stock (see Chart III.20) and evidencing a decline of US$ 350 million

against the last day of April. This stock of banknotes is held by the institutions basically to address the

transactions related to domestic deposits in foreign currency and to meet the needs of the foreign exchange

market.

Chart III.19 Institutions’ Exchange Position Chart III.20 Banknotes Stock / Exchange Position Ratio

At the end of each month At the end of each month

40%37%

30%

39%37%

34%33%

25%

40%37%

35%

46%

41%43%

35%

44%43%

40%44%

47%49%46%

52%

60%

47%

38%41%

47%44%

45%

43%43%45%

71%

77%

64%

61%

56%

72%

51%

52%

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17

Own currencies Third consultation earrings unapplied funds Banknotes

Millons of dollars%

By the end of May, in relation with forward transactions in foreign currency made in the domestic markets24,

the ensemble of institutions recorded a net long position of US$ 184 million, up US$ 38 million against the

closing of the previous month, mainly due to the decrease in forwards short position (see Charts III.21 and

III.22).

If the forward stock in foreign currency is broken down by type of institution, foreign entities ended May with

purchases for US$ 248 million. Regarding national entities, private institutions ended May with sales for US$

69 million and public institutions recorded purchases for US$ 4 million.

23 The PGNME considers all assets and liabilities for financial intermediation in foreign currency and in securities in foreign currency (for spot and forward transactions), including derivatives contracts related to these concepts and those addressing the evolution of the exchange rate, the headings that must be taken into account for PGC purposes, deposits in such currency in accounts opened at the Central Bank, as well as the position in gold, BCRA’s Bills in foreign currency, the subordinated debt in foreign currency and debt instruments in foreign currency. Forward transactions are also included if made within a framework agreement in the area of self-regulated markets of the country under the method of settlement in cash, without the delivery of the underlying asset being traded.

24 This information comes from the system implemented by Communication “A” 4196 and supplementary regulations.


172

-201

-5-33

70

2 0

72

242

-199

-5

38

Foreign private entities National private entities Public entities Total

Institutionalized markets Forwards Total

Millon of dollars

Chart III.22 Change in Institutions’ Forward Position

868

643

-1.310

-459-442

184

-4.000

-3.000

-2.000

-1.000

0

1.000

2.000

3.000

4.000

Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17

Chart III.21 Institutions’ Forwards Position

Forwards Position in Institutionalized markets

Positions in forwards

Forwards net position

Millon of dollars

III) b.3. Foreign Exchange Capital and Financial Account of the Public Sector and the BCRA

The foreign exchange capital and financial account of the Public Sector and the BCRA recorded a surplus of

US$ 172 million in May 2017 (see Chart III.23). The transactions accountable for such surplus include foreign

currency inflows from the National Treasury for the issue of LETES, and of BONAR 2037 and 2025 bonds

denominated in US dollars, for US$ 1.94 billion, US$ 444 million and US$ 430 million, respectively.

In turn, the outflow of funds for the payment of LETES for US$ 1.6 billion and for debt net settlements with

international institutions for US$ 1.07 billion, basically related to the agreement executed with the Paris Club,

should be underscored.

-1.058

1.588 1.378

-529 -294

6.731

-482

324

8.023

2.365

684

-3.013

172

May-16 Jun-16 Jul-16 Ago-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17

Chart III.23 Foreign Exchange Capital and Financial Account of the Public Sector and the BCRA

Millons of dollars

Documents

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