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 balance of $269,800 million (32.2% YoY), registering a significant monthly growth driven by the positive statistical carryover from December, as a result of the high demand for transactional money characteristic of the end of the year. On the other hand, with an average balance of $228,280 million, private sector means of payment (private M2) registered a monthly growth of 3.5% (33.1% YoY).

• Total private deposits increased by 2.3%, driven by both demand placements (2.1%) and fixed-term deposits (3.4%). With regard to the latter, once the period of high demand for liquidity was over, they registered a monthly growth rate above that observed in October and November 2010. In particular, fixed-term deposits belonging to the wholesale tranche (placements of more than $1 million) showed an increase of 3.7%, while those corresponding to the retail stratum (placements of less than $1 million) increased 3.1%.

• In the second month of the quarterly calculation of the Minimum Cash position, financial institutions modified the composition of their liquidity in pesos. In particular, the assets that are computed as part of the Minimum Cash regime (cash and current accounts at the Central Bank) represented 16.1% of total deposits in pesos in January, a ratio 0.3 p.p. lower than in the previous month. In turn, the holding of LEBAC and NOBAC of the entities fell by the equivalent of 0.3 p.p. of deposits, while their position of passes with the BCRA increased by 0.7 p.p.. Thus, the broad liquidity ratio (defined as the sum of cash in banks, the current account of the entities in the BCRA, the passes with the BCRA and the holdings of LEBAC and NOBAC in terms of total deposits in pesos), was 40.7%, 0.1 p.p. higher than in December.

• Loans to the private sector in pesos grew 2.9% ($4,775 million), increasing their year-on-year expansion rate to 37.9% YoY, 2.2 p.p. above December. Influenced by seasonal factors associated with the summer recess, they showed a lower rate of monthly expansion in the first month of the year, which was mainly reflected in the behavior of commercial lines (current account advances and documents) and credit card financing, while the rest of the lines presented growth rates similar to those of previous months.

• The interest rates paid by private financial institutions for deposits in pesos of up to 35 days, both in the wholesale and retail tranches, did not vary with respect to the previous month. In fact, the monthly average of the BADLAR remained at 11.1%, while that corresponding to the retail bracket (up to $100 thousand) was around 9.2%.

• The interest rates charged on commercial loans to the private sector showed dissimilar behaviors, while decreases were observed in those applied to financing with collateral. Meanwhile, the rates of the lines associated with consumption remained relatively stable compared to the previous month. The average monthly interest rate on current account advances decreased 0.4 p.p., standing at around 18.8%. On the other hand, that corresponding to single-signature documents stood at 15.3%, after increasing 0.5 p.p. in January, while the interest rate on financing via discounted documents closed the month at 13.5%, increasing 0.1 p.p.. On the other hand, the rate on mortgage loans decreased 0.9 p.p., standing at 13.7%; while the interest rate on loans with collateral stood at 17%, falling 0.4 p.p..

• The stock of international reserves reached its all-time high, standing at US$52,618 million on the last day of January. This level meant an increase of US$430 million compared to the previous month, mainly driven by the Central Bank’s purchases of foreign currency within the framework of its managed floating exchange rate policy.