Monthly Monetary Report

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

Summary

• In March, the broadest monetary aggregate in pesos (M3), which includes the working capital held by the public and the total deposits in pesos, registered a growth of 1.5%. The main source of creation of ample money was loans in pesos to the private sector, followed by purchases of foreign currency by the Central Bank in the foreign exchange market.

• Total deposits in local currency grew by 1.9% during the month, driven essentially by private sector placements, which grew by 2.9%. In particular, private sector time deposits continued to show remarkable dynamism, increasing 4.3% in March and accumulating a year-on-year variation of 38.9%, the highest in the last 6 years. When distinguishing by strata of amount, the increase was observed both in the wholesale bracket (of $1 million and more) and in that of less than $1 million, a segment that showed a monthly growth that more than doubled that of the same month in previous years.

• The financial system continued to show high levels of liquidity. The ratio used as an indicator of broad liquidity in local currency (sum of cash in banks, current account deposits, transfers of financial institutions with the BCRA and holdings of LEBAC and NOBAC, over total deposits in pesos), remained at 37.5%. However, there was a change in the composition of the assets that make it up, in favor of current accounts at the Central Bank and to the detriment of net passes with the Central Bank.

• After the effects of the summer recess dissipated, loans in pesos to the private sector accelerated their monthly rate of expansion, registering an increase of 2.2% in March ($5,530 million). Current account advances, intended to finance mainly commercial activities, and consumer loans accounted for most of the month’s increase. The year-on-year variation of credit in pesos to the private sector remained at a value similar to that of the previous month, standing at 46.9%, with commercial lines showing the highest growth rate.

• Short-term passive interest rates (up to 35 days) continued to show a downward trend, both in the wholesale and retail segments. The BADLAR rate of private banks averaged 12.9% in the month, falling 1.3 p.p. compared to the previous month and accumulating a fall of 5.9 p.p. compared to the December average. Thus, with the decrease accumulated throughout the year, the BADLAR rate is close to September levels. For its part, the interest rate paid by private banks for their retail fixed-term deposits (up to $100 thousand) remained at 12.1%, accumulating a reduction of 2.1 p.p. so far this year.

• Interest rates on active operations also decreased in the month, led by those arranged for loans to the private sector to finance commercial activities. In particular, the average monthly interest rate on documents discounted to companies decreased 1.8 p.p. in the month. Thus, it accumulated a fall of 6.4 p.p. compared to the December average, standing at 19.3%. Meanwhile, the average monthly interest rate charged by private entities for current account advances of more than $10 million and up to 7 days of term stood at 14.1%, decreasing 1.6 p.p. compared to February and accumulating a drop of 8.4 p.p. so far this year. In turn, interest rates on longer-term financing lines also registered decreases that, in most cases, were close to 1 p.p..