Monthly Monetary Report

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

Summary

• In August, private sector time deposits registered an increase of $2,620 million (4.3%). 40% of the monthly growth was explained by the rise in retail deposits (less than $1 million), which continued with the upward trajectory that they resumed from the end of May.

• The monetary aggregate M2 stood at $157,480 million, registering a year-on-year growth of 13% (similar to that recorded by private M2). The slowdown in the demand for means of payment was mainly driven by the aforementioned good performance shown by term placements, both public and private. In particular, the working capital held by the public decreased by $690 million (1%). Thus, the broad monetary aggregate M3 in pesos (which includes the circulating currency held by the public and the total deposits in pesos) increased by $2,990 million (1.1%) and stood at $267,270 million.

• Financial institutions continued to show significant levels of liquidity. The bank liquidity ratio – defined as cash in banks, bank current accounts at the BCRA and passive passes for the BCRA, as a percentage of deposits in pesos – presented an average
level of 21.1%, 0.6 p.p. above the average of the previous month. When also considering the holdings of LEBAC and NOBAC, the broader liquidity ratio stood at 39%. In addition, the system’s minimum cash position ended with a surplus of 0.4% of total deposits in pesos, slightly
higher than in previous months.

• A part of the liquidity of financial institutions continued to be allocated to the pass market with the Central Bank, in which the diversity of available monetary regulation instruments was expanded, by incorporating new terms. In fact, active and passive passes were added to 14, 21 and 28 days,
in addition to the already in force terms of 1 and 7 days.

• In the aforementioned context, short-term interest rates in the money market decreased. In the market for interbank loans in pesos, the interest rate fell 0.5 p.p., averaging 8.7% for the month. In addition, the BADLAR rate of private banks averaged 12.3% in August, with a decrease of 2.6 p.p. compared to July. In tune, for the second consecutive month, short-term lending rates fell and, in particular, those associated with financing for commercial activity. The average interest rate on advances fell by 2.5 p.p. to 19.4% compared to July, while the average interest rate for loans granted in the form of signature documents fell 2.6 p.p. to 17.7%.

• Total loans to the private sector, in pesos and foreign currency, showed an increase of 1.5% ($1,880 million). Although they continued to soften their expansion, varying in year-on-year terms by 33% compared to 35% in the previous month, the current monthly increase was considerably higher than that observed in the previous two months. Since the increase was observed mainly from the second half of August, considering figures at the end of the month, the increase reached $2,700 million.