Since the beginning of the year, Argentina's Central Bank international reserves have experienced a cumulative drop of more than $4 billion, down from $33 billion at the start of the year. Despite the two nearly neutral days that the agency recorded in February, the cumulative amount this month exceeds $820 million, along with the net $1.75 billion purchased last month through this route.
The decrease in reserves has not been greater thanks to the rebound in international gold prices. However, this is not enough to counteract the downward trend in gross international reserves, which have declined by nearly $2 billion in the last 30 days. Part of this reduction is due to withdrawals of dollars from the private sector, which have accumulated more than $860 million in the last ten days.
According to experts, this decrease in reserves can be explained by cash withdrawals at bank branches, historic dollar card payments, and the use of MEP dollar balances by importers, allowed by the Central Bank since late November. It is noteworthy that the series of currency purchases made by the Central Bank do not succeed in stopping the decline in reserves.
Despite the Government's expectations that foreign exchange earnings would increase with the reduction of taxes on the agro-export sector, the downward trend persists. Reserves are also affected by dollar debt payments by the Treasury and interventions in the financial market to control the MEP dollar exchange rate. The drop in reserves is also explained by foreign currency debt payments to international organizations, the outflow of private dollar deposits, and interventions in financial exchange rates.
