Monthly Monetary Report

Monthly report on the evolution of the monetary base, international reserves and foreign exchange market.

Summary

• In April, the broadest monetary aggregate in pesos (M3) showed a growth of 1.6%, with a year-on-year variation of 22.9%, which was 0.6 p.p. higher than in March. Within the components of M3, the boost came from fixed-term placements which, favored by high yields, continued to grow strongly, presenting the largest monthly increase (5.1%) since the beginning of 2013. Distinguishing by strata of amount, progress was made in both placements belonging to the wholesale segment (5.3%) and those of less than $1 million (4.8%). Thus, fixed-term deposits from the private sector accelerated their year-on-year rate of change by 4.8 p.p. to 39.2%.

• In April, the liquidity of financial institutions in the segment in local currency (sum of cash, current account at the Central Bank, net passes with this institution and the holding of LEBAC and NOBAC) increased again, 2.1 p.p., to reach 35.7% of total deposits in pesos, and was mainly applied to the increase in the balances of passes and securities issued by the Central Bank.

• In a context of greater seasonal liquidation of foreign currency by exporters, and after three months of stabilization of the foreign exchange market, international reserves increased by US$1,213 million and totaled US$28,220 million at the end of April. The increase was explained by the Central Bank’s purchases in the foreign exchange market, which were partially offset by the decrease in the foreign currency accounts of financial institutions in the BCRA and by the payment of public debt denominated in dollars made through the Treasury accounts in the same entity.

• At the end of April, the Central Bank slightly reduced the interest rates it pays on the securities it places each week in the primary market, in a context where the variables of the exchange market are stabilized. The decrease in interest rates was 1 p.p. in all maturities of the yield curve. Thus, the interest rate of the LEBACs auctioned at a predetermined cut-off rate – with terms of 95 days and 105 days – stood at 27.8% and 27.9% respectively.

• In April, loans in pesos to the private sector softened their growth rate, reaching a year-on-year variation of 29.1%, while lending rates in general were reduced. The Central Bank continued to stimulate productive credit, through the Bicentennial Productive Financing Program (PFPB) and the Credit Line for Productive Investment (LCIP). Within the framework of the PFPB, the total resources disbursed since the beginning of the program amount to about $6,300 million. Within the LCIP, the Central Bank allowed financial institutions to apply part of the quota for the first half of 2014 to the discount of deferred payment checks for MSMEs (10% per month, starting in March, with a total limit of 30%), but without the possibility of transferring what was not applied in one month to the next.