Part of what happened in the foreign exchange market in that month explains the movements, both of investors and savers as well as of banks, that were seen in the run-up to the Japanese debacle. The net inflow of capital continued while banks reduced their PGC, mainly of banknotes.
For the sixth consecutive month, Argentines brought in more foreign currency than they took out of the system last July through the exchange market. They were, in total, US$166 million netso that so far in 2024 the Net Formation of External Assets of Residents of the Non-Financial Private Sector (FAE), also called hoarding, records a surplus result of US$753 million. It is worth noting that In the same period of 2023 there was hoarding, that is, the FAE was negative, which is also known as capital flight in financial jargon, for US$772 million. So the reversal of flows is evident, above all, betting on operations of “carry trade”.
Last July, the net inflow of foreign currency by the non-financial private sector is explained by US$92 million of net income in foreign currency and net sales of banknotes for US$74 million. While in the accumulated amount of 2024, net sales of banknotes totaled US$436 million and the rest corresponds to the repatriation of direct investments abroad (US$4 million) and other investments abroad (US$313 million).
Besides, In July, net income to own accounts from abroad was recorded for a total of US$92 millionlinked to net income from the Institutional Investors and Others sector for US$45 million, from the Real Sector for US$30 million, from Individuals for US$16 million and one million from the Oilseeds and Cereals sector, according to the Central Bank (BCRA).
More indebtedness
As for the channel linked to the movements of financial debt of the non-financial private sectorincluding loans from international organizations and local financial loans, The balance was positive by US$112 million (where net income from the Energy and Mining sectors stands out, by US$127 million and US$40 million, respectively)This result is explained by net inflows from local loans of US$129 million, which were partially offset by net outflows from financial debts with foreign countries and securities in foreign currency and loans with international organizations of US$16 million. Meanwhile, direct investments by non-residents in the non-financial private sector recorded net inflows through the foreign exchange market of US$49 million in July.
In this way The financial account of the Non-Financial Private Sector of the BCRA’s Foreign Exchange Balance recorded a deficit of US$440 million in July as a result of net transfer exchange operations with abroad for US$644 million, for the cancellation of foreign currency balances with local entities for the use of cards with non-resident suppliers for US$146 million, for net outflows of foreign financial debts and debt securities for US$28 million and for outflows of portfolio investments by non-residents for US$3 million, which was partially offset by inflows from foreign assets for US$166 million, the net granting of local financial loans for US$129 million and inflows from foreign direct investment for US$49 million.
Meanwhile, the banks
In July, The operations of the financial sector’s foreign exchange account resulted in a surplus of US$385 million mainly due to the fall in liquid external assets of the entities that make up the General Foreign Exchange Position (PGC) by US$400 million, due to net income from financial loans and credit lines for US$28 million, which was barely offset by the net subscription of securities with foreign currency for US$43 million.
This way The entities ended the month with a PGC stock of US$6,331 million, which meant a 6% drop compared to the closing of the previous month.due to the fall in the holding of banknotes of US$482 million, which was partially offset by the increase in the holding of foreign currency of US$82 million. According to data from the BCRA, the holding of banknotes in foreign currency thus totaled US$4,152 million at the end of July, a stock that represented 66% of the total of the PGC and that is kept by the entities to meet the movements of local deposits in foreign currency and the needs of the exchange market.
On the other hand, The financial system closed July with a short position in foreign currency for US$665 million, reducing its short position with respect to the close of the previous month by about US$6 million.During July, the entities purchased US$4 million in institutionalized markets and US$3 million directly from “Forward” clients.
Foreign-owned entities closed July with a net short position of US$317 million, reducing their short position with respect to the previous month by US$105 million, while national entities increased their short position by US$99 million with respect to June, reaching US$348 million.
Source: Ambito
I’m a recent graduate of the University of Missouri with a degree in journalism. I started working as a news reporter for 24 Hours World about two years ago, and I’ve been writing articles ever since. My main focus is automotive news, but I’ve also written about politics, lifestyle, and entertainment.
