The average monthly balance of private deposits in pesos remained practically unchanged compared to September in nominal terms, with an increase in demand placements (2.7%) and a fall in time deposits (2.7%). During October, and despite the exchange controls in force, a significant increase in the demand for foreign currency by individuals was observed, which led to a lower seasonally adjusted growth of private M2 and time deposits showing a downward trajectory. As of October 28, the regulatory change that established a limit of US$200 per month for access to the foreign exchange market for individuals came into force.
In October, the monthly average of the Monetary Base (WB) was $1,386.4 billion, which implied an overachievement of the target of $4.9 billion (0.4%). For November, the BCRA’s Monetary Policy Committee (COPOM) established a growth of the WB target of 2.5% with respect to the October target. Thus, the resulting WB target for the beginning of November is estimated at $1.584 billion, which will be adjusted by the net foreign exchange operations of the month.
The interest rate on Liquidity Bills (LELIQ) fell 10.4 p.p. since the end of September, reaching on October 11 the minimum rate of 68% per annum that COPOM had set on September 18. Rates paid on time deposits, while also on a downward trajectory, fell by more than half. For example, the TM20 of private banks averaged 55.7%, 6.1 p.p. below that observed the previous month. For November, the COPOM decided to reduce the minimum LELIQ rate to 63% per annum, consistent with market projections of a slowdown in the inflation rate.
Private sector dollar deposits slowed their rate of decline in October. The balance ended October at US$19.1 billion, 10.6% below its level at the end of the previous month. In October, financial institutions obtained funds from the collection of loans in foreign currency to the private sector. As a result, bank liquidity in foreign currency increased compared to September, averaging 54% of deposits in dollars, practically at pre-election levels.
Loans in pesos to the private sector registered a nominal seasonally adjusted increase, driven mainly by commercial lines and, to a lesser extent, by financing granted through credit cards.
