Monthly Monetary Report

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

Summary

• In June, the broadest monetary aggregate in pesos (M3) showed a growth of 3.5% and accumulated an increase of 32.5% in the last year. All its components showed increases, highlighting time deposits and means of payment, both from the private sector.

• Private sector time deposits increased by 3.4% and remained highly dynamic, leading to a further acceleration in their year-on-year variation, which exceeded 40%. The balance of operations of more than $1 million grew 2% and reached an increase of 41% YoY. In the case of deposits of less than $1 million, they continued to grow firmly, registering an increase of 5% in the month and accumulating a rise of 39% in the last twelve months; this segment continued to be favored by the minimum interest rate scheme for individuals established by the BCRA.

• The liquidity ratio of financial institutions in the peso segment (sum of cash in banks, the current account of the entities in the Central Bank, net passes with such entity and the holding of LEBAC) remained at high levels (39.4% in terms of deposits in pesos).

• Loans in pesos to the private sector accelerated their monthly growth rate, exhibiting an increase of 2.6% ($15,760 million). Its year-on-year variation continued to increase and stood at 27.4%, 1.8 p.p. more than in May. Among the different lines of credit, the growth of loans instrumented through advances, driven by seasonal factors, stood out. Other lines that presented a better performance than in previous months were signature documents and loans with real guarantee, favored by the higher placements within the framework of the Credit Line for Productive Investment (LCIP).

• The Central Bank renewed the LCIP in the second half of 2015, expanding its financing volume and lowering interest rates for financing granted under this line. Thus, a policy that will result in an increase in the supply of credit for the productive sector, especially for micro, small and medium-sized enterprises (MSMEs), is deepened. In this new tranche, the financial institutions covered by the regulation must allocate to this line an amount equivalent to 7.5% of their deposits in pesos from the private sector. Thus, the volume of financing expands to around $52,000 million in the second half of the year. In addition, the maximum rate at which loans must be granted was reduced from 19% to 18% n.a.; meanwhile, the minimum financing term remained at 36 months.

• The interest rates paid by financial institutions for their fixed-term deposits in pesos remained relatively stable. In the wholesale segment, the BADLAR of private banks averaged 20.4%; In the retail segment, the monthly average interest rate paid by private entities for fixed-term deposits of up to $100,000 and up to 35 days of term stood at 22.6%.

• Most of the interest rates applied to loans in pesos decreased, with the falls in those corresponding to commercial lines standing out. The monthly average interest rate on current account advances stood at 28.3%, falling by about 2 p.p., and in the segment that covers those advances to companies for more than $10 million and up to 7 days of term, the interest rate averaged 20.2%, more than 4 p.p. below its level in May. On the other hand, the monthly average interest rate applied to single-signature documents was 25.2%, decreasing 0.9 p.p., while that applied to the discount on documents averaged 24%, registering a decline of 0.2 p.p.