Central Bank of Argentina Surpasses $3 Billion in Market Purchases in April

The Central Bank of Argentina (BCRA) has exceeded $3 billion in market purchases in April 2023, marking the highest level of purchases for the same month in the past decade. Since Javier Milei's management began in December, the BCRA has been actively buying foreign currency in the exchange market, accumulating a total of $14.27 billion in purchases.

These significant purchases have allowed the country's gross reserves to reach $29.91 billion, approaching the $30 billion mark not seen since June 2022. On Monday, April 23 alone, the BCRA bought $304 million, bringing its total purchases for the month to $2.90 billion.

The BCRA's ability to resume purchases on a day with high foreign exchange settlement has been vital, as it allows the central bank to rebuild reserves while keeping parallel dollar rates under control. Economist Salvador Vitelli noted that April 2023 has been the highest month for BCRA purchases in the exchange market, surpassing even the record set in 2014.

Why this matters: The rebuilding of Argentina's foreign currency reserves is a key step for the government to advance in opening the stocks and in exchange rate unification. The BCRA's net reserves have been negative for over a year but are now either positive or close to turning positive, according to different consulting firms.

The exchange rates in Argentina have also seen updates, with the 'blue dollar' trading at ARS 1,015 for purchase and ARS 1,035 for sale, while the official dollar is at ARS 852 for purchase and ARS 892 for sale. The exchange gap between the informal and official dollar currently stands at 16.03%.

The Central Bank of Argentina's successful efforts to rebuild foreign currency reserves in April 2023 represent a significant milestone for the country's economy. As Vitelli stated, "April 2023 has been the highest month for BCRA purchases in the exchange market, surpassing even the record set in 2014." The focus now shifts to the BCRA's net reserves and the potential for exchange rate unification in the near future.

Key Takeaways

• BCRA purchases hit $3B in April 2023, highest in a decade.
• BCRA accumulated $14.27B in purchases since Milei's management.
• Gross reserves reached $29.91B, approaching $30B not seen since June 2022.
• Rebuilding reserves is key for stock market opening and exchange rate unification.
• Exchange gap between informal and official dollar stands at 16.03%.