Monthly Monetary Report

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

Summary

• The aggregate in pesos of the private sector (private M3) showed a growth of 2% ($10,060 million) in August, driven by the increase in fixed-term deposits. These placements showed the highest year-on-year growth in the last ten years, with a rate of change that stood at 45%. In the month they accumulated an increase of 5.5%, which was driven both by the impositions of the wholesale stratum (of $1 million and more; 6.5%) and by placements of less than $1 million (4.6%). In both segments, the monthly increase recorded was record.

• The increase in private monetary aggregates was mainly explained by the increase in loans to the private sector. To a lesser extent, but in the same sense, the BCRA’s purchases of foreign currency operated, while the public sector was contractionary in net terms.

• Loans in pesos to the private sector strongly accelerated their pace of expansion as of June, registering a monthly increase of 3.6% ($10,500 million) in August. This increase was greater than that observed in the same month of the previous year, with which the year-on-year growth rate increased 0.7 p.p. and stood at 42%. Although generalized increases were observed in all lines, commercial lines continued to lead the rise.

• In a context of sustained growth in both deposits and loans to the private sector, the liquidity ratio of the peso segment of financial institutions declined. The broad liquidity ratio (calculated as the sum of cash in banks, the current account of the entities in the Central Bank, the net passes with the Central Bank and the holdings of LEBAC and NOBAC, as a percentage of total deposits in pesos) was 35.7%, 0.7 p.p. lower than in July. This decrease was mainly explained by the fall in the holdings of LEBAC and NOBAC (0.4 p.p.), followed by that of passes with the BCRA (0.2 p.p.) and cash in banks (0.1 p.p.).

• In August, the Central Bank validated interest rate increases through LEBAC tenders in the primary market. The increases were mainly registered in the short section of the yield curve, mainly in the species that are tendered at a predetermined cut-off rate, which exhibited increases of 0.7 p.p.. In the same direction, interest rates on medium- and long-term species showed increases, which were around 0.5 p.p..

• Interest rates paid by private financial institutions continued the upward trend observed in the last three months. Increases were recorded in both the retail and wholesale segments, which again led the increase. In fact, the BADLAR rate of private banks – interest rate on deposits of $1 million and more with a term of 30-35 days – registered a monthly increase of 0.7 p.p., averaging 13.9% in August.

• Interest rates applied to loans to the private sector showed dissimilar behaviors. On the one hand, interest rates on lines intended to finance commercial activities showed moderate increases, while those applied to loans with real collateral continued the downward trend observed in recent months. Among commercial lines, the monthly average interest rate corresponding to current account advances of more than $10 million and up to 7 days of term stood at 13.2%, increasing 0.3 p.p. in the month. On the other hand, interest rates on loans with real collateral showed a decrease of 0.2 p.p. in the case of mortgages and 0.4 p.p. in the case of pledges. The average monthly interest rate on personal loans also decreased 0.4 p.p., standing at 33.2%.