Monthly Monetary Report

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

Summary

• Total means of payment (M2) were once again within the range established in the Monetary Program in June, registering an average balance of $175,200 million (12.2% YoY), $3,600 million above the lower limit. Meanwhile, private M2 showed a significant recovery that had already been hinted at in May and consolidated in June, registering an average value of $145,650 million (7.1% YoY), which meant an increase of 3.1% in the month, which was also within the bands foreseen in the estimates of the Monetary Program.

• In June, although prudential behavior was observed among economic agents that resulted in a preference for more liquid assets, confidence in the local monetary and financial system was reflected in the increase in total placements in pesos. In this way, total deposits in pesos grew 0.5%. Likewise, the largest aggregate in pesos, M3, registered a growth of 1.3% in June, while private M3 showed an advance of 1.6%.

• During the month under review, the BCRA ordered the holding of tenders for options to access active passes in pesos, a measure aimed at preserving financial stability and credit dynamics. So far, 2 auctions have taken place, one in mid-June and another in early July. After declaring the first auction void, the BCRA introduced changes in the mechanism of the operation. Thus, in the second auction, the entities submitted bids for $90 million, of which the BCRA decided to award $50 million, determining a cut-off premium of 1%. The awarding entities will be able to exercise the option of access to an active pass at a pre-set rate of 13.4375% within the next 365 days. The amount of the pass that they will be able to access may not exceed the growth of the loans they register from the auction until the time of the exercise of the option.

• The liquidity of financial institutions did not show significant variations in June. The liquidity ratio resulted in an average of 22.7% of total deposits in pesos when considering liquidity composed of cash in banks, current accounts of entities in the BCRA and (net) passes in the BCRA. Meanwhile, when including the holdings of LEBAC and NOBAC by the entities, the liquidity ratio was 36.4% of deposits in pesos, a value similar to that of May.

• Passive interest rates remained stable, while those charged for loans to the private sector showed reductions in practically all lines. In particular, the monthly average of interest rates paid by private banks in the wholesale tranche and up to 35 days of term (BADLAR) stood at 12.9%. With regard to the most representative lending rates, the one corresponding to advances granted with an agreement of up to 7 days to companies for amounts greater than $10 million, in Capital and GBA, reached an average level of 16%, 0.7 p.p. below the average of the previous month. In the same sense, the interest rate of the most traded segment of discounted documents corresponding to companies, for a term of up to 90 days, also in Capital and GBA, fell 0.6 p.p., standing at an average of 16.5%. In this way, the margin between lending and passive rates continued to shrink.

• In June, credit in pesos to the private sector intensified the recovery it had been showing throughout the second quarter of the year. Thus, loans in pesos to the private sector showed a monthly increase of $1,240 million (1.1%), a variation that had not been observed since the deepening of the international financial crisis in October 2008. The increase in the month is The increase in the month was mainly explained by financing for mainly commercial purposes.