Dollar and reserves: in May there was repatriation of capital for US$94 million encouraged by “carry trade”

It is almost certain that when the data for last June are known History will seem to have turned aroundbut the latest exchange rate statistics of the Central Bank (BCRA) They showed again that in May the Argentines continued repatriating funds from abroad and “un-cannibalizing” savings from recent years.

It’s just that last May there was a de-hoarding of 94 million dollars. In this way, in the last quarter The re-entry of capital or the de-hoarding of Argentines added $461 million, and so far this year about 440 million dollars.

Undoubtedly due to the climate prevailing in those months. Bets on the carry trade were raised, While inflation was slowing, the exchange rate pattern remained stable despite the interest rate cuts by the BCRA, Investors and savers were betting on the peso. Based on what has been seen in recent days, it could be anticipated, although it is still very premature, that When the June numbers are known, the story could be different, needless to say if July continues along the current trend.

For now, the de-hoarding of foreign currency in May is explained by net banknote sales of $62 million and net foreign exchange earnings of $32 million. BCRA data shows that the increase in banknotes was due to the Net sales by legal entities of $57 million, plus another $5 million from individuals.

In addition, in May there were net income to own accounts from abroad for a total of 32 million dollars, mainly due to net income from the “Real Sector” for 46 million dollars and “Institutional Investors and others” for 11 million dollars. This net income stream was partially offset by the Net outflows to own accounts abroad of individuals amounting to 25 million dollars. That is, there were already some who preferred take profits and exit the carry and take the currencies out of the system.

Direct investments from non-residents

There was also an influx of direct investment from non-residents into the non-financial private sector, which involved net income through the foreign exchange market of 152 million dollars in May, according to data from the BCRA.

For their part, the The financial sector’s foreign exchange operations showed a deficit of 298 million dollars. This was due to the increase in liquid external assets of the entities that make up the General Foreign Exchange Position (PGC) by 135 million dollars, by net outflows from financial loans and credit lines for 82 million dollars, by the net subscription of securities for 73 million dollars, by net outflows from loans from international organizations for 4 million dollars and from foreign direct investment for another 4 million dollars.

In this way, the entities ended May with a PGC stock of 6.535 billion dollars.which meant an increase of 2% compared to the close of the previous month. The result was explained by the increase in the holding of foreign currency by 380 million dollars, partially offset by the fall in the holding of banknotes by 244 million dollars, explained the BCRA.

The holding of foreign currency bills thus totaled 4.751 billion dollars at the end of the month, stock that represented 73% of the total PGC and 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 group of entities closed May with a forward short position in foreign currency for 836 million dollarsdeepening their short position compared to the previous month’s close by around 122 million dollars. In May, the entities sold 170 million dollars in institutionalized markets and bought 48 million dollars directly from “Forward” clients.

Foreign-owned entities closed May with a net short position of 476 million dollars, increasing its short position compared to last month by 116 million dollars, while the National entities sold 6 million dollars, increasing its net short position compared to the previous month to $360 million.