Monthly Monetary Report

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

Summary

• During the last month of each year (December) monetary aggregates show a notable seasonal behavior. The payment of the half-year supplementary salary, the higher expenses of families during the holiday period and the beginning of the summer recess generate an increase in the demand for transactional money and a moderation in the growth rate of fixed-term deposits. In December 2012, private M2 in pesos grew 7.4%, in line with the average growth observed during the month of December of the last 3 years, while fixed-term deposits of the private sector in pesos increased 2.2%, above the growth recorded in recent years for this month.

• Private M3 increased by 5.8% in the last month of the year, with loans in pesos to the private sector once again standing out among the factors that explained its increase. The latter ended the year as the main promoter of aggregate growth. To a lesser extent, the BCRA’s purchases of foreign currency and public sector operations also contributed to its expansion.

• Loans in pesos to the private sector ended the year with a growth of 40.5%. In the last two months of 2012 the year-on-year rate of change accumulated an increase of 3 p.p.. The growth recorded in December, of 4.3% ($14,030 million), exceeded that of the same month in 2011, highlighting the dynamism of commercial lines.

• Until the first half of December, financial institutions have disbursed approximately 91% ($13,650 million) of the credits to be placed through the “Credit Line for Productive Investment”. The total granted was distributed in similar parts among large companies and MSMEs. The projection of disbursements made during the second half of December and those that will be made during the first half of 2013 (the latter coming from operations agreed with more than one disbursement) indicate that the degree of compliance with the line will exceed 100%. In 2013, the BCRA will once again promote this line of financing, considering, this time, 5% of the private sector’s deposits in pesos in November 2012 ($17,000 million).

• A new tender was held in December under the Bicentennial Productive Financing Program (PFPB). On this occasion, $220 million were auctioned, of which $206.9 million were awarded. Thus, throughout 2012, $1,670 million were awarded and a total of $5,784 million since the beginning of the PFPB.

• The liquidity ratio in pesos (calculated as the sum, in terms of total deposits in pesos, of cash in banks, the current account of the entities at the Central Bank, the net passes with such entity and the holding of LEBAC and NOBAC) stood at 34.1%, 0.4 p.p. below November. In the month, there was an increase in shorter-term assets to the detriment of longer-term assets (decrease in holdings of LEBAC and NOBAC and increase in cash in banks and in the balance of the current account of entities at the Central Bank).

• Short-term interest rates paid by private financial institutions continued the upward trend observed in recent months. In the wholesale segment, the BADLAR rate of private banks averaged 15.4% in December, increasing 0.1 p.p. in the month, although standing 3.4 p.p. below the level of December 2011. Meanwhile, in the retail segment, the interest rate paid by private banks for their fixed-term deposits (up to $100,000 and up to 35 days) registered a monthly increase of 0.2 p.p., averaging 13.2% in December. As in the wholesale segment, it was 1 p.p. below the level of December 2011.

• Interest rates on loans to the private sector registered dissimilar movements in December. While those granted with real collateral remained stable, those corresponding to commercial and consumer lines increased by different magnitudes. However, most were at levels below the values recorded a year ago.