Monthly Monetary Report

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

1. Summary
• Total means of payment (M2) registered a monthly growth of 0.8% in November, while private means of payment (private M2) increased 1.7%. Thus, both total M2 and private M2 show a trajectory that is compatible with the goals established for December in the 2011 Monetary Program. The expansion of M2 continued to be driven mainly by the increase in peso loans to the private sector and, to a lesser extent, by the expansion generated by public sector operations. Part of these expansionary effects was attenuated by the growth of fixed-term deposits in the private sector. These placements continued to accelerate their monthly expansion rate, showing a growth of 4.2% in the month, being the highest for the month of November since 2002 and one of the highest in recent years.

• The Central Bank continued to intervene in the foreign exchange market to limit the volatility of the exchange rate and provide the liquidity necessary for the proper development of the money market, renewing only partially the LEBAC and NOBAC that were maturing, and carrying out buybacks in the secondary market. During November, no new variations were registered in the interest rates of the LEBACs, remaining stable for the different maturities. In turn, the margins paid on BADLAR by private banks in NOBAC placements continued to decrease throughout the month.

• Loans in pesos to the private sector rose by 3.1% ($7,060 million) in November, presenting a year-on-year rate of change of 51.3%. In this context, lines with an essentially commercial purpose continued to increase, in year-on-year terms, above those aimed at financing household consumption, which allowed financing to companies to gain share in the total balance of loans, representing 42% of the total in the last month.

• The average level of short-term passive rates (up to 35 days) registered an increase, both in the wholesale and retail tranches, while the amounts traded in the period remained at the high levels evidenced since the previous month. However, when analyzing the daily evolution of the BADLAR of private banks, it can be seen that after having reached a peak in the middle of the month, it began to decrease gradually, ending at the end of November 1 p.p. below the end of October. Private sector lending rates also showed increases, although of different magnitudes, depending on the type of loan.

• In the foreign currency segment, the average monthly balance of total deposits showed a decrease of 10.9%, with reductions, mainly, in private sector placements, although during the month of November there was also a reduction in public sector deposits. In November, private sector deposits accumulated a fall of US$2,700 million, which was verified both in fixed-term deposits and in savings banks. However, the rate of decline showed a marked downward trend throughout the month. In fact, more than 80% of the fall was recorded during the first half of November, with only 5% of the total fall being concentrated during the last week of the month.

• In order to prevent the fall in foreign currency deposits from affecting the dynamism of credit for export activity, the BCRA ordered the exclusion of the defect in the application of the calculation basis of the minimum daily integration, measured in force as of November 1. The daily current account balance in dollars of financial institutions in the BCRA may not be less than 50% of the minimum cash requirement of the previous month; While previously the total requirement was considered, which includes the defect in the application of resources in foreign currency, as of November only the requirement for deposits is considered. This measure helped to prevent the behavior of foreign currency deposits from affecting the dynamics of foreign currency loans, mainly aimed at financing the export sector. On the contrary, in the last month, the average stock of foreign currency loans to the private sector registered an increase of 1.8% (US$ 175 million) compared to the October average.