Dollars: the repatriation of capital in August was a record and reached US$460 million

What happened in August in exchange matters is, in part, related to the strong return of foreign currency by Argentine residents who, attracted by bets on the “carry trade” and for other reasons linked to personal finances, almost US$460 million entered the local system.

According to the latest official data, the so-called “net formation of external assets of residents of the non-financial private sector” or FAE, was a surplus of US$456 million as a result of net foreign exchange income of US$413 million which fundamentally went from foreign funds to local accounts in foreign currency, what is known as “swaps” and the rest from net sales of tickets.

This is the largest “repatriation” of foreign currency since December of last year and you have to go back to June 2005 to see a similar record (US$454 million). So that Also called “hoarding” or “capital flight” in financial jargon, has accumulated a negative balance of US$1,209 million so far this year.that is, more dollars entered than those that escaped or were taken out of the system. If this trend continues in the fourth quarter, 2024 will be the first year since 2013 in which Argentines discard foreign currency, that is, they bring or take out more dollars from safe deposit boxes and “mattresses” than they take or keep outside. of the system.

Of course, in the middle of all this, there is the bleaching effect, the rebirth of the “carry” and other factors that explain this behavior of people and families. It is worth remembering that Last August the quotes of informal dollars had a downward path, the Central Bank (BCRA) after two months returned to buy reserves in net terms and private dollar deposits grew almost US$750 million.

Who brought foreign currency in August?

Official statistics show that the net income to own accounts from abroad (for US$413 million) is explained by the net flows of the Institutional Investors sector and others for US$281 million, from the so-called Human Persons for US$67 million. , another US$64 million from the Real Sector and US$1 million from the Oilseeds and Cereals sector. While net ticket sales corresponded almost 93% to Legal Entities, that is, companies and companies.

On the other hand, direct investments by non-residents in the non-financial private sector recorded net income through the exchange market for US$90 million.

This way, The FAE contributed to the positive balance of the financial account of the Non-Financial Private Sector of the BCRA Exchange Balance, which recorded a surplus of US$281 million product, precisely, of the income from foreign assets for US$456 million -mainly “swaps”-, the net granting of local financial loans for US$553 million, the income from foreign direct investment for US$90 million, the income net foreign financial debts and debt securities for US$89 million and sales of securities in foreign currency for US$2 million.

All this positive flow was partially offset by exchange operations for net transfers abroad for US$575 million.which, according to the BCRA, were mainly the counterpart of export collections from the real sector of goods and services not settled in the exchange market and deposited in local accounts, income from consumption by non-resident tourists with cards and income from foreign assets of residents that were deposited in local accounts and the income from abroad to local accounts of freely available external assets.

But in addition, there were cancellations of balances in foreign currency with local entities for the use of cards with non-resident suppliers for US$172 million (which do not entail a net demand for foreign currency in the financial account), for expenses due to net cancellation of loans from international organizations for US$141 million and for non-resident portfolio investment expenditures for US$22 million, which subtracted from the surplus of the financial account of the non-financial private sector.

Currencies: what happened to the banks?

In August, The operations of the financial exchange account of the Financial Sector resulted in a surplus of US$831 million as a result, mainly, of the fall in the liquid external assets of the entities that make up the General Exchange Position (PGC) for US$858 million, which was barely offset by the net expenses from financial loans and lines of credit for US$ s26 million and for the net subscription of securities with foreign currency for US$1 million.

Regarding the PGC stock, Banks closed August with a position of US$5,622 millionwhich implied a drop of 13% compared to the close of last July. According to the BCRA, The result was explained by the drop in foreign currency holdings for US$1,319 million, offset by the increase in banknote holdings for US$461 million.

Now, Regarding the increase in the stock of banknotes of the entities, the BCRA indicates that it is linked to the increase registered in the month in deposits in foreign currency for about US$500 million within the framework of the Asset Regularization Regime. The holding of banknotes in foreign currency thus totaled US$4,560 million at the end of the month, a stock that represented 81% of the total PGC and which is kept by the entities to attend to the movements of local deposits in foreign currency and the needs of the exchange market.

For their part, the group of entities closed August with a forward sold position in foreign currency for US$97 million, reducing their sold position compared to the close of the previous month by around US$570 million. During August, the entities purchased US$187 million in institutionalized markets and US$387 million directly from “Forwards” clients. On the one hand, foreign capital entities closed August with a net sold position of US$18 million, reducing their sold position compared to the previous month by US$299 million, while national entities reduced their sold position by US$271 million compared to the previous month. to the previous month, lowering it to US$79 million.