Monthly Monetary Report

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

1. Synthesis

• In November, monetary aggregates in pesos continued their recovery path that began in the first quarter of this year. Total means of payments (M2) reached an average balance of $233,130 million, registering a monthly increase of 1.6% (28.8% YoY). As last month, the increase in loans to the private sector was the main factor explaining the variation in total M2 in November. In line with previous months, the good performance of credit continued to promote a high secondary creation of money, which in the last two months exceeded the purchases of foreign currency made by the Central Bank in the market as the main factor of monetary growth. For its part, the broad monetary aggregate (M3), which includes the working capital held by the public and the total deposits of the private and public sectors, showed an increase of 2.1%, accumulating an increase of 35.5% in the last 12 months, due to the good performance of time deposits in both the private and public sectors.

• Term deposits increased, mainly in the wholesale segment (placements of more than $1 million), while deposits in the retail segment also grew. However, it is likely that in the coming weeks term placements (especially wholesale) will reduce their rate of expansion, as a result of the high demand for seasonal liquidity by companies, which among other factors is associated with the payment of the complementary half annual salary.

• The Central Bank of the Argentine Republic implemented a new means of payment called Cancelling Checks, which aims to reduce the use of cash and, in this way, increase security in banking operations.

Cancelling Cheques can be drawn in pesos or US dollars, the latter being able to be used only in real estate purchase operations. At the end of November, Cancelling Checks in local currency amounted to $8 million and those issued in foreign currency amounted to US$5 million. It should be noted that the definition of means of payment (M2) includes Cancelling Checks in pesos, so that the replacement of the use of cash by these new instruments does not alter their value, but only changes their composition.

• In November, there were small decreases in the cut-off interest rates of the LEBACs, partially reversed at the end of the month. It should be noted that in the last tender in November, instruments of 1 and 2 months of term were awarded again. With regard to NOBACs, the total of the awards for the month constitutes a record amount and the terms of the placed species were extended from 6 to 22 months, with the largest awards being made through species with maturities of 180 days. The margins paid on the BADLAR of Private Banks were lower for the longest maturities, with a decrease of 0.15 p.p. in the species placed at one year. The Central Bank’s interest rates on passes remained at the same levels as in October. Passive pass rates stood at 9% and 9.5%, for 1 and 7 days, respectively, while interest rates on 1-day and 7-day active passes stood at 11% and 11.5%, respectively.

• Interest rates in the interbank market (call) averaged 9.4%, with a fall of 0.7 p.p. compared to October, while the interest rate in the 1-business day pass market between financial institutions (excluding the Central Bank) was 9.4%, 0.8 p.p. less than in October. The average interest rate paid by private financial institutions for deposits in pesos of up to 35 days and for more than $1 million (BADLAR) stood at 10.8%, increasing 0.1 p.p. in the month. For its part, the monthly average of the interest rate paid in the retail bracket (up to $100 thousand) remained at 9.1%. The interest rates charged for the most representative commercial loans showed disparate behaviors. On the one hand, the average monthly interest rate of total advances grew 0.6 p.p. in the month, standing at 19.2%. On the other hand, the average monthly interest rates of discounted documents registered a slight increase (0.1 p.p.), standing at 13.4%. On the other hand, the interest rate charged for financing with signature documents registered a decrease of 0.4 p.p., standing at 14.7% at the end of November.

• Loans in pesos to the private sector showed an increase in their monthly average of 3.2% ($4,960 million) in November, with a variation in year-on-year terms of 33.1%, 2.4 p.p. above that registered in the previous month. Although monthly growth was somewhat lower than in the previous month, they continued to maintain a high level of dynamism, with similar contributions from both commercial and consumer lines, with both segments growing around 3.3% in the month.

• Within the framework of the Bicentennial Productive Financing Program (PFPB), which aims to grant long-term funds to financial institutions in order to improve the supply of credit for investment and productive activity with a total financial cost fixed in pesos, the second auction of funds was carried out. On this occasion, the total amount tendered amounted to $350 million and resources for $340 million were awarded. The interest rate to be paid by each financial institution will be 9% nominal per annum on the funds awarded, while the total financial cost for the respective borrowers will be up to 9.9% nominal per annum.