Monthly Monetary Report

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

Summary

• The average balance of total means of payment (M2) reached $171,700 million in February, showing a fall basically driven by the behavior of public deposits, since private M2 evolved according to its seasonal pattern.

• The demand for money from the private sector continued to show a good performance. The working capital held by the public increased 0.1% in seasonally adjusted terms. For their part, private deposits in pesos increased 1.8%. Among these placements, term deposits stood out, which accumulated an increase of 4.8%, with advances in both the retail segment (placements of up to $1 million) and in the wholesale segment.

• Banks continued to maintain high levels of liquid resources. The most immediate liquidity ratio in pesos (which includes cash, the current account at the BCRA and net passes in this Institution, as a percentage of total deposits) stood at 22.1%, 0.4 p.p. above that recorded in January. Meanwhile, when considering the holdings of LEBAC and NOBAC by the entities, the ratio was also higher than in the previous month (37.1%). The quarterly minimum cash position in pesos ended with a surplus of 0.6% of total deposits.

• The minimum cash position in foreign currency ended the month with a surplus of 42% of deposits in dollars. In order to facilitate the allocation of these surplus resources to credits for the export sector, at the beginning of March the BCRA approved a new operation, through which it will begin to carry out tenders for access to foreign currency passes. The banks that are awarded in the tenders, against the payment of the premium resulting from each tender, will have the right (“option”) to receive from the BCRA a pass in dollars with a preferred rate (the same will be set at the time of each auction), to the extent that they have increased their loans in foreign currency and register falls in deposits in dollars.

• In the context of ample liquidity that continued to prevail, passive interest rates continued to decline. The BADLAR rate for private banks fell 1.2 p.p., reaching a value of 11.8% at the end of February. Meanwhile, interest rates paid by private banks to retail placements, amounts of less than $100,000, reached a level of 12.1%, with a decrease of 1.3 p.p. compared to the last data of January.

• Lending rates also showed a decrease, in particular, in the shorter-term lines. The interest rate charged for current account advances fell 3.5 p.p. in the month, reaching an average monthly level of 22.6%. In the most traded segment, that corresponding to advances granted by agreement to companies for amounts greater than ten million pesos, in Capital and GBA, reached an average level of 17.5%, with a decrease of 3 p.p. compared to January. On the other hand, the interest rate for loans granted in the form of signature documents fell 3 p.p. to an average of 20.7%. Meanwhile, the balance of loans in pesos to the private sector remained practically stable in the month.