Monthly Monetary Report

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

• In January, the broadest monetary aggregate in pesos (M3) showed a monthly growth of 5%, while in year-on-year terms the increase stood at 27.5%. As seasonally expected, there was a slowdown in the monthly growth of the demand for transactional money and an acceleration in fixed-term placements, both in the public and private sectors.

• Fixed-term deposits in the private sector increased 3.1% in the month. In particular, retail deposits registered a monthly variation of 4.6%, associated with the boost that the minimum interest rate scheme established by the BCRA since October 2014 has been giving them. Thus, retail deposits accelerated their year-on-year variation, reaching 35.4%, a growth that is 12.3 p.p. higher than that recorded by wholesale fixed-term deposits.

• Loans in pesos to the private sector showed a growth of 2.5% ($13,680 million), which was lower than in December, as expected during the summer recess. In year-on-year terms, they continued to show a rate of change in the order of 20%. Among the different lines of credit, the increase in current account advances and credit card financing stood out.

• The liquidity in national currency of financial institutions (sum of cash in banks, current account balances of entities in the Central Bank, net passes with such entity and holdings of LEBAC) increased in January, and in terms of total deposits in pesos represented 40.2%. The monthly increase, of 0.6 p.p., was explained by the rise in net passes and the holding of LEBACs, and was mainly concentrated in some public banks. On the other hand, there was a reduction in both the proportion held in cash, due to the seasonal decline in the demand for money, and that held in the current account at the Central Bank. In this regard, the possibility granted to banks by the quarterly calculation (December 2014-February 2015) of the minimum cash position to manage their liquidity during the quarter, allowed them to reduce the average integration of January, after the surplus recorded in December.

• In a context of exchange rate stability and comfortable levels of liquidity in the financial system, there were slight reductions in the interest rates of the LEBACs that the BCRA tenders weekly. The decrease was between 0.2 p.p. and 0.6 p.p. in the shorter-term species that are placed at a predetermined cut-off rate – at terms of 100 days and 120 days – which stood at 26.56% and 27.24%, respectively; while the reduction was 0.3 p.p. in the most mature species awarded, with a term of 360 days, which stood at 28.94%.

• International reserves reached US$31,451 million at the end of January, remaining at a stable level compared to December. During the month, two additional tranches of the local currency swap agreement with the Central Bank of the People’s Republic of China were activated. Within the framework of this agreement, the Central Bank of the Argentine Republic is authorized to require exchanges for up to a
maximum equivalent to approximately US$ 11 billion in total, which constitutes a support for the
execution of financial, exchange and monetary policy.