Monthly Monetary Report

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

Summary

• In July, the private sector’s fixed-term deposits in pesos accumulated a record monthly increase, which reached $10,500 million, made up of both placements of $1 million and more and retail deposits (of less than $1 million). Thus, the year-on-year growth rate of private sector time deposits continued to be at historically high levels. When comparing the average balance of July with that recorded a year ago, it is observed that these placements accumulated an increase of 44%.

• As a result of the increase observed in fixed terms and the increase in working capital, the broader monetary aggregate in pesos (M3) grew 2.7% in July. The working capital held by the public was associated with seasonal factors linked to the winter holidays and the receipt of the half-year supplementary salary. For their part, private sector deposits also showed a very good performance. Thus, in the last 12 months the M3 accumulated an increase of 29.7%.

• The main factor that explained the monthly growth of M3 continued to be the increase in loans in pesos to the private sector, which in July reached 3% ($11,670 million), the highest in the last six months. Thus, these financings reached a year-on-year variation of 39.3%. In line with what happened in previous years, lines with an essentially commercial destination were the ones that accounted for most of the increase in the month. Indeed, the financing instrumented through documents and advances made the main contributions to the growth of the month.

• According to the latest available information, corresponding to June, financing granted in the form of leasing contracts significantly increased its monthly rate of change, showing an increase of 6.1% ($470 million) in the month, the highest since September 2011.

• In a context in which the growth of loans in pesos to the private sector exceeded that of deposits in the same currency, a decrease was observed in the liquidity ratio of the peso segment of the entities (sum of cash in banks, the current account of the entities in the Central Bank, the net passes with such entity and the holding of LEBAC and NOBAC, in terms of total deposits in pesos), which averaged 31.5%, 1.1 p.p. below June. The decrease was concentrated in longer-term assets (holding LEBAC and NOBAC), whose share of deposits fell by 0.6 p.p., and in pass operations, with a fall in their share of around 0.3 p.p.. This decrease occurs in a general context in which bank liquidity remains ample.

• Interest rates paid by financial institutions to depositors (passives) showed a slight increase in July. In fact, the interest rate on all new forward transactions in pesos averaged 14.95% in July, approximately 0.2 p.p. above that corresponding to June.

• Interest rates applied on loans in pesos to the private sector (active) also showed slight increases in July. In particular, in the case of the rates of loans granted through signature documents and those corresponding to loans with real guarantees, the increases were the result of a reduced basis of comparison, due to the fact that in June there was a greater concentration of financing granted within the framework of the Credit Line for Productive Investment – which are granted at lower interest rates and with longer terms – as is usually the case during the months when the stages of this line expire.

• In July, issuances in the local corporate debt market totaled approximately $2,500 million, 8.5% above the previous month. This performance occurred in a context where the number of placements increased, going from 10 issues in June to 22 in July; most of them being denominated in local currency.

• Issuances by financial trusts set a new record (excluding those destined to finance infrastructure works), totaling just over $2,060 million. This amount represented an increase of close to 70% compared to the previous month. The significant amount issued in the month was accompanied by an increase in the number of operations, which reached 22, compared to a monthly average of 17 operations in the first half of the year.