Monthly Monetary Report

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

1. Synthesis

• Total means of payments (M2) reached an average of $204,200 million (14.5% YoY) in January, registering an increase of 3.7% in the last month. This increase was driven
by the statistical carryover evidenced by the components of the means of payment, associated with the sharp increase in the demand for transactional money at the end of the year. In particular, private sector means
of payment registered a monthly growth of 3.5%. The main factor of monthly expansion of M2 was the purchase of foreign currency by the Central Bank, in a context of exchange rate stability, in which the non-financial private sector continued to be a net supplier of foreign currency.

• Total deposits in domestic currency increased 2.1% in the month, with increases of similar proportion in the private and public sectors. The growth in total private deposits was driven by increases in both demand loans (3%) and fixed-term loans (1.8%). With respect to the latter, while those corresponding to the retail segment (up to $1 million) continued with their upward march that began in mid-2009, those belonging to the wholesale tranche recovered throughout January the seasonal fall evidenced in December as a result of the greater demand for liquidity by companies.

• The ample liquidity of financial institutions (defined as the sum of the current account at the Central Bank, cash at banks, net passes with the Central Bank and holdings of LEBAC and NOBAC) remained relatively stable in January and reached 37.3% of total deposits in pesos, with a change in composition, in favor of net passes with the Central Bank.

• Driven mainly by financing mainly for consumption, the average balance of loans in pesos to the private sector increased in the month by 1.5% ($1,830 million), and accumulated a year-on-year growth of 11.5%. Loans intended to finance mostly commercial activities and those granted with real collateral also registered increases compared to the previous month.

• Short-term interest rates in the money market remained relatively stable in January, and still showed declines in some segments. In particular, among passive interest rates, the monthly average interest rate paid by private banks in the wholesale tranche and for deposits of up to 35 days (BADLAR) stood at 9.9%. For its part, the monthly average of the interest rate paid by private banks to retail placements, for the same term, fell 0.3 p.p., standing at 9.1%. Meanwhile, interest rates on interbank loans fell slightly. For total operations, the average interest rate stood at 8.8% (‐0.2 p.p.).

• Among commercial loans granted by private banks in Capital and GBA, the interest rate on current account advances (considering total operations) fell 0.5 p.p. compared to the December average, reaching a level of 20.4%. In particular, the average interest rate on current account advances with prior agreement, granted to companies, for up to 7 days of term and for amounts greater than $10 million, stood at 10.9%. Interest rates on the remaining loan lines remained relatively stable, with levels in the order of 13.7% for document discounting operations, 32% for personal loans, and 13.8% and 16.6%
for financing with mortgage and pledge guarantees, respectively.