Monthly Monetary Report

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

Summary

The average monthly balance of private deposits in pesos grew 1% compared to October in nominal terms, with an increase in time placements (2.2%) and a fall in demand deposits (-0.3%).

The fall in demand deposits was made up of the placements of larger amounts. Mutual Funds (FCIs) allocated a greater proportion of their portfolio to passes in the BCRA and decreased their balances of interest-bearing demand deposits in commercial banks. In November, the average monthly balance of FCI passes at the BCRA was $69,500 million higher than the previous month. Overall, demand deposits in pesos from the private sector and FCI passes at the BCRA increased 5% in November.

The trend of time deposits in pesos in the private sector changed as a result of the changes in the conditions of access to the foreign exchange market implemented as of the end of October. Since then, the balance of both household and business placements has increased. Between the last day of October and November, the private sector’s time deposits in pesos increased 5.6% in nominal terms ($64.4 billion).

The average monthly balance of the Monetary Base (WB) was $1,569.7 billion, 13.2% higher than in October. This increase was mainly explained by the increase in the balances of the current accounts of financial institutions at the BCRA to comply with the new conditions of the Minimum Cash regime. As of this month, the integration with LELIQ of part of the reserve requirements on demand deposits was no longer admitted, which led to an increase in demand for BM. Excluding the effect of this regulatory change, the monthly growth of the WB is reduced to 2.2%. The WB’s balance was $92.8 billion below the target set for November.

In the middle of the month, the interest rate on the LELIQ reached the minimum level of 63% that the COPOM had set for November, thus completing a monthly fall of 5 p.p. Interest rates paid on time deposits in pesos also showed declines throughout the month. Among those operated for deposits of larger amounts, the TM20 of private banks ended the month at 45.1%, 4.3 p.p. below its level at the end of October.

Private sector dollar deposits continued to slow their rate of decline. In November they fell 3.5%, compared to 10.7% in October and 19.7% in September. They ended the month under analysis at US$18,400 million. Bank liquidity in foreign currency increased for the second consecutive month, to 56% of deposits in dollars, as financial institutions continued to recover funds from the fall in the balance of loans in dollars.

Loans in pesos to the private sector continued to accelerate, registering an average monthly seasonally adjusted increase of 4.1%. The monthly dynamism of loans in pesos is mainly explained by the evolution of credit card financing and, to a lesser extent, by the growth of commercial loans.

The balance of international reserves ended November at US$43,772 million, which implied an increase of US$512 million compared to the end of the previous month. As a result of the changes in access to the foreign exchange market established at the end of October, the BCRA returned to being a net buyer of foreign currency and in November acquired US$2,202 million. These operations compensated for the fall in reserves due to the debt payments of the National Government.