Monthly Monetary Report

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

Summary

• In January, the demand for money continued to recover, a process that has been reflected in the dynamics of private sector deposits, the decline in interest rates and in the evolution of the foreign exchange market. In fact, in the month there was a significant recovery in fixed-term deposits in the private sector, which grew 3.2%, an increase similar to that of previous years, when the AFJPs participated in this sector. The expansion was seen in both the retail segment (placements of up to $1 million) and in the wholesale segment.

• The average balance of total means of payment (M2) reached $178,120 million, showing a monthly growth of 2.8% and a year-on-year variation of 15.4%, while private sector means of payment (Private M2) registered a year-on-year variation of 8.4%. In the month, the working capital held by the public advanced 2% while demand deposits increased 3.4%, both following their seasonal pattern. In this way, the process of gradual normalization in the demand for transactional money was consolidated, after the impact, between September and November of last year, of the worsening of the international crisis.

• ANSES continued with its process of periodic auctions of fixed-term deposits with funds from the FGS. At first, funds were granted for loans in local currency for consumption, the purchase of new cars and the financing of SMEs. In the January auctions, the auto parts industry was incorporated among the recipients, as well as one in foreign currency that aims at the pre-financing of exports.

• The liquidity of financial institutions that considers the sum of cash in banks, current accounts of banks in the BCRA and (net) passes for the BCRA as a percentage of deposits was on average 21.8%, which turned out to be 1 p.p. higher than the previous month and one of the highest in recent years. For its part, the broader liquidity ratio – that is, considering the holdings of LEBAC and NOBAC by the entities – also rose and stood at 36.7%, which meant an increase of 0.4 p.p. in the month. At the end of January, the minimum quarterly cash position in pesos in pesos from December 2008 to February 2009 showed a cumulative surplus of 0.9% of total deposits. Both private and public banks exhibited surplus positions, equivalent to 1.4% and 0.3% of deposits, respectively.

• In this scenario of ample liquidity, short-term passive interest rates continued their downward trend that began the previous month. In particular, the average rate of the BADLAR private banks fell 3.2 p.p. compared to December, while the interest rates paid by private banks to retail placements (for amounts less than $100,000) fell 1.1 p.p.. The interest rate of the interbank market also decreased 1.8 p.p. compared to the previous month, while interest rates on shorter-term loans also showed reductions compared to December.

• Loans in pesos to the private sector showed an increase of 0.2% ($260 million) in January, driven essentially by mortgage loans and credit card financing. Compared to the same month of the previous year, they registered an increase of 18.8%.