Monthly Monetary Report

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

Summary

• The average balance of total means of payment (M2) reached $167,400 million in March, registering a growth of 11.7% in year-on-year terms. Thus, the total M2 was within the limits established in the Monetary Program for the first quarter of the year. Similarly, with a monthly average of $140,200, private M2 was within the range foreseen by the estimates contained in the Monetary Program.

• Normalization in the financial markets was driven by the full use of the stabilization mechanisms developed by the central bank in recent years, to avoid sudden movements that could affect expectations. Thus, a limited impact on monetary variables was observed.

• The average balance of total fixed-term deposits showed an increase of 1.1% compared to the average for February, a behavior that, although it was led by public sector deposits, was also manifested in those belonging to the private sector.

• In the foreign currency segment, total deposits increased 6.6%, mainly through private sector placements. Thus, the broadest aggregate, M3*, which includes the circulating currency held by the public and the total deposits in pesos and foreign currency, showed an advance of 0.2% monthly.

• Banks’ liquid assets continued to account for a significant proportion of deposits. The bank liquidity ratio – defined as the sum of cash in banks, bank current accounts in the BCRA, (net) passes in the BCRA and holdings of LEBAC and NOBAC as a percentage of deposits – stood at 36.9%, a level similar to that of the previous month.

• Passive interest rates registered a slight increase in March. The BADLAR rate of private banks increased 0.6 p.p. throughout the month, reaching 12.4% at the end of the month. On the other hand, interest rates in the interbank lending market remained stable. In particular, the average interest rate for 1-business-day operations – the most traded term – remained unchanged compared to February, standing at 10.5%.

• Loans in pesos to the private sector showed a monthly growth of 1% ($1,080 million), driven essentially by commercial financing, which after the summer recess showed greater dynamism and presented a monthly advance of 2.7% ($1,070 million). The growth of this segment was generalized in all its lines:
financing instrumented with documents grew 3.6% ($660 million), current account advances advanced 1.8% ($300 million), while other commercial financing increased 2.1% ($110 million).

• Lending rates continued to decline. Although the reductions in the short-term strata were noteworthy, falls were also observed in the interest rates of the medium- and long-term lines. The interest rate on current account advances fell 2.2 p.p. compared to the previous month, as did the interest rate for loans granted in the form of signature documents. Meanwhile, interest rates on personal loans registered a fall of 2.1 p.p. compared to February.