During the second quarter of this year, an estimated 8.5 billion US dollars left Argentina, double the worst quarter in 2007 and higher than the most negative of private forecasts, according to the latest information from the Argentine Central Bank.
"The prolonged turbulences in international financial markets, together with a non aligned demand for money unrelated to the current situation of the (Argentine) financial system or macroeconomic domestic fundamentals led to a process of change in portfolios in favor of overseas assets", reads the carefully worded Central Bank release. Argentine private consultants had detected with anticipation the phenomenon but it was the most pessimistic of estimates that proved to be closer to the mark, and the change in portfolios' composition from Argentine pesos to US dollars and Euros was to be to the tune of 7.5 billion US dollars, according to former Finance Secretary Mario Brodersohn from Econometrica. In the first six months of the year the Argentine money exchange market registered purchases by companies and families equivalent to 17.84 billion US dollars, with sales of foreign currency reaching 7.2 billion US dollars and a net result of 10.65 billion US dollars which left Argentina. This contrasts with modest 258 million US dollars of the same period a year ago. The loss of foreign currency in the second quarter was generated is spite "of a record surplus in trade and a good performance of foreign direct investment and international loans", adds the release. The deficit in the domestic money exchange market reached 3.6 billion. The bank adds that as happened during the third quarter of 2007 "with the beginning of financial turbulences in global markets, the approach of the Central Bank risk administration office to moderate the effects of the crisis in the local money exchange market and in the domestic variables as well as to modify expectations was favored by the anti cyclical policies adopted in recent years". However the bank ends with a positive note giving to understand that "the worst is over". Demand for highly disposable foreign assets reached a peak last May, registering a deceleration all along June both through a lesser demand of foreign currency bills as of portfolio investments overseas, "in line with the recovery of deposits in the domestic financial system".