Reserves: In June, Argentines repatriated dollars for the fifth consecutive month

The first half of the year closed and The Central Bank’s (BCRA) Foreign Exchange Balance showed a positive balance in terms of foreign currency de-hoarding, Above all, thanks to the occurred in the second quarter. The latest official data show that in June the so-called “net formation of external assets by residents of the non-financial private sector”, dubbed in the market as flight or hoarding, registered a surplus of 146 million dollars.

This way, The first half balance was positive at 587 million dollars, reflecting the appetite for “carry trade” bets. A year ago, in the same period, the behavior was the opposite: there was a capital outflow of 577 million dollars in the run-up to the 2023 PASO.

Analyzing the BCRA numbers, it can be seen that the June de-hoarding This is mainly explained by net sales of banknotes by companies, which totaled 95 million dollars, since families offset purchases and sales for a similar amount of 9 million dollars. This positive flow is also accompanied by 52 million dollars of net income in foreign currency.

In this regard, the BCRA explains that the net income to own accounts from abroad was due to 34 million dollars from the “Real Sector”, another 10 million dollars from “Institutional Investors and others”, plus 6 million dollars from “Individuals” and 1 million dollars from the “Oilseeds and Cereals” sector.

On the other hand, the Direct investments by non-residents in the non-financial private sector recorded net inflows through the foreign exchange market of US$71 million.

Now, we will have to see how savers and investors behave with the new exchange rate flexibilities in a semester that promises more pressure on the BCRA reserves. In addition, what has been observed in terms of operations with banknotes is a growing number of sellers and a retraction of demand, which has almost balanced the retail market.

Dollars: What did the banks do?

As for the financial sector, In June, the sector’s foreign exchange financial account operations showed a deficit of 332 million dollars, which is mainly explained by the increase in liquid external assets of the entities that make up the so-called General Foreign Exchange Position (PGC) by 249 million dollars, plus 66 million dollars of net outflows from financial loans and credit lines and 21 million dollars from the net subscription of securities, less net inflows from foreign direct investment of 4 million dollars.

In this way, the entities ended the month with a PGC stock of 6.761 billion dollars, which meant an increase of 4% compared to the close of the previous month. According to the BCRA, the result was explained by the increase in foreign currency holdings of 402 million dollars, which was partially offset by the fall in banknote holdings of 154 million dollars.

This gave rise to The holding of foreign currency bills totaled 4.598 billion dollars at the end of the month, a stock that represented 68% of the total of the PGC and is kept by the entities to meet the movements of local deposits in foreign currency and the needs of the exchange market.

In relation to the operations in the futures marketthe group of entities closed June with a Foreign currency forward short position for $671 millionreducing its short position by around 164 million dollars compared to the previous close. Also during June, the entities bought 482 million dollars directly from clients called “Forwards” and sold 318 million dollars in institutionalized markets.

What can be seen is that on the side of foreign capital entities, there is a reduction in their short position by 52 million dollars, thus closing June with a net short position of 422 million dollars, while national entities bought 112 million dollars, decreasing their net short position compared to the previous month to 249 million dollars.