Monthly Monetary Report

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

1. Synthesis

• In September, the goal of the Monetary Program (MP) was met in an environment close to the base scenario. With an average balance of $298,380 million, total means of payment (M2) accumulated a growth of 18.4% compared to December, 0.5 p.p. above the base scenario projected in the PM. Likewise, so far this year, the trajectory recorded by private means of payment (private M2) is consistent with the annual growth target (29.2% in December) established for this aggregate in the PM.

• M2 showed a monthly decrease of 0.6%, with a fall in savings bank deposits that was partially offset by increases in current account placements and working capital held by the public. The persistent and high dynamism of loans in pesos to the private sector, especially commercial financing, continued to promote the growth of means of payment. The increase in public sector time deposits exceeded the expansionary monetary effect that its operations had on the monetary base, so the net effect of the public sector on M2 was contractionary. In the same vein, the net sales of foreign currency made in September by the Central Bank operated, which, however, so far this year it has accumulated a positive balance due to its intervention of approximately US$ 2,900 million.

• In September, loans in pesos to the private sector accelerated their monthly rate of expansion, registering an increase of 5.1% ($10,530 million). In this way, they continued to increase their year-on-year rate of change, which reached 52%. Likewise, the performance of loans associated with commercial activity continued to be highlighted, which since the last quarter of 2010 have grown above the lines destined to finance household consumption.

• In September, a tender for the Bicentennial Productive Financing Program (PFPB) was held, through which $253 million was awarded. Thus, the total awarded since the beginning of the PFPB amounts to $2,917 million, of which $1,364 million have been disbursed so far.

• The broad liquidity ratio in pesos of financial institutions (defined as the sum of current accounts at the Central Bank, passive passes for this Institution, cash in banks and LEBAC and NOBAC; as a percentage of total deposits in pesos) fell by 1.2 p.p. to 37.2%. This decline occurred in a context in which loans in pesos to the private sector continued to grow at a higher rate than total deposits in the same currency.

• In order to promote savings in pesos, the Central Bank validated increases in interest rates on LEBAC placements. In particular, interest rates on shorter-term LEBACs (up to 6 months) registered a monthly increase of close to 1.5 p.p., which, added to the rise recorded since the end of August, places them at levels similar to those prevailing at the beginning of 2010. On the other hand, the margins paid for the longer-term species, at a variable rate, were reduced slightly.

• In line with the behavior of interest rates on Central Bank securities, the main interest rates in the money market increased in the month. The monthly average of the BADLAR rate of private banks stood at 13.1%, showing an increase of 0.8 p.p. compared to August. On the other hand, the interest rate of private banks in the segment of up to $100 thousand and short-term also increased, although more slightly than the wholesale rate (0.4 p.p.), averaging 10.3% in September. In relation to active interest rates, the rate corresponding to discounted documents registered a monthly increase of 0.7 p.p., standing at around 15.3%. while the average monthly interest rate on current account advances stood at 19.3% after increasing 0.3 p.p. compared to August. Likewise, the interest rate on personal loans averaged 30.3% in the month, after rising 0.4 p.p.. Regarding interest rates on longer-term loans, the interest rate on title loans increased 0.5 p.p. in the month, and stood at 19.4%.

• During September, fifteen placements of negotiable obligations were registered (the highest amount recorded in a single month in 2011), for a total amount subscribed just under $1,000 million. This amount, which became the third highest of the year, was divided between nine placements in local currency, for a total of $550 million, and the remaining six for US$100 million. It is also noteworthy that five of these issuances (three of them in local currency) belong to SMEs, for a total subscribed amount of $40 million.