Why did central bank reserves fall by more than $3 billion in January?

By various means, the few dollars that enter the country flow from the reserves of the Central Bank.

In January, The “individuals” bought USD 551 million net, mainly for expenses made with cards for consumption with foreign suppliers. And 727,000 people made hoarding foreign currency note purchases with a net $139 million, up 9 percent from December.

On the other hand, “Interest” was paid net of USD 1,313 million.

As part of the gross interest cancellations, USD 1,328 million was made by the “General Government and BCRA”, while the private sector totaled payments of USD 276 million”, according to the evolution of the foreign exchange market and the Central Bank’s foreign exchange balance.

Meanwhile, the General Government and BCRA foreign exchange financial account recorded a deficit of USD 3,138 million, explained mainly by gross capital payments to the International Monetary Fund amounting to USD 2,641 million (SDR 1,975 million).

On the other hand, U$S 414 million of net export receipts for export receipts of USD 4,577 million and import payments of USD 4,163 million. This surplus is much less than the US$1,101 million in January 2022.

All these movements, among other things, explain that in January the international reserves of the BCRA decreased by 3,181 million dollars, closing the month at a gross level of 41,417 million dollars.

According to the BCRA report, “this decline was mainly explained by capital payments to the International Monetary Fund, principal and interest payments by the national government in foreign currency, sales of BCRA in the foreign exchange market and net payments from BCRA through the local currency Payment System, movements that were partially offset by the increase in the US dollar price of the assets that constitute the reserves and by the increase in the interests of the entities in the BCRA”.

Last year for travel tickets and other overseas card payments, cargo and insurance, $10,296 million remained. And in interest on public and private debt, another $7,291 million, of which $1,785 million was in payments to the IMF and $851 million in write-offs with the rest of the financial organizations. A total of US$17,587 million.