Monthly Monetary Report

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

Summary

• During the month of February, the main factors that contributed to the increase in monetary aggregates in pesos were the purchases of foreign currency by the Central Bank and the growth of loans in pesos to the private sector. The broader monetary aggregate in pesos (M3) grew 1.2% in February, while total means of payments (M2) showed a reduction of 2.3%, mainly influenced by the change in the composition of public sector placements, from demand deposits to fixed-term deposits.

• Private sector fixed-term deposits continued to show high dynamism, increasing 4.4% ($4,980 million) in the month, accelerating their year-on-year expansion rate by 1 p.p. to reach 37%. This growth was driven both by placements of more than $1 million and by those made for lower amounts. The monthly increase in the latter was the highest in recent years for February (4.1%).

• In a context of increased deposits, the liquidity in pesos of financial institutions (defined as the sum of current accounts in pesos at the Central Bank, cash in pesos, passes with the Central Bank and holdings of LEBAC and NOBAC, as a percentage of deposits in pesos) increased by 0.8 p.p., to 37.5% of deposits in pesos. In turn, there was a change in the composition of bank liquidity, in favor of interest-bearing assets.

• Total loans to the private sector (in pesos and foreign currency) increased in February. The year-on-year rate of change of total loans to families and companies (expressed in pesos) stood at 44.3%. Essentially commercial lines accounted for most of the increase. As usually happens during the summer recess, when both companies and families reduce their demand for financing, the increase in loans in pesos to the private sector was moderate, 1.4% ($3,320 million). The three main lines of financing (commercial, consumer and those granted with real guarantees) registered growth.

• Interest rates on LEBACs were reduced over the course of February. Compared to the previous month, interest rates fell by more than 1 p.p. for shorter terms, and by more than half a percentage point for longer-term species.

• Short-term passive interest rates of private entities continued the downward trend evidenced in recent months. Again, the greatest variation was registered in the wholesale segment, where the BADLAR of private banks fell almost 2 p.p. and stood at 14.1%. For its part, the rate paid by private entities for fixed-term deposits of up to $100,000 and with a 35-day term stood at 12.7%, after falling 0.8 p.p. in February.

• Overall, lending rates on loans to the private sector declined in the month. The largest falls were again recorded in the rates of the lines intended to finance commercial activities, especially those with a shorter term. The average monthly rate charged by private entities for current account advances of more than $10 million and up to 7 days of term, stood at 15.8%, decreasing almost 3 p.p. in the month. On the other hand, that corresponding to documents discounted to companies up to 90 days registered a monthly drop of 2.5 p.p., averaging February at 20.5%.