Monthly Monetary Report

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

Summary

• In September, the broader monetary aggregate in pesos (M3) showed a monthly growth of 1.8%, with a relatively stable year-on-year rate of change of around 29%. For its part, the broader private monetary aggregate (private M3) increased 1.9% in the month, accumulating an increase of 31.5% YoY. Among the components of private M3, fixed-term placements increased 2.9% and continued to gain share within the aggregate, reaching a weight of 31%. Thus, the year-on-year growth rate of private sector time deposits continued at historically high levels, standing at 40.9%.
• The factors that explained the monthly expansion of private M3 were loans in pesos to the private sector and public sector operations. Considering the first nine months of 2013, credit in pesos to the private sector was the main factor driving private M3, which was driven by the BCRA’s policies aimed at promoting financing for productive activity.

• The broad liquidity ratio in pesos (sum of cash in banks, the current account of the entities in the Central Bank, the net passes with such entity and the holding of LEBAC and NOBAC in terms of deposits in pesos) increased 0.2 p.p., standing at 32% in September. This increase was explained by the increase in the holdings of LEBAC and NOBAC of the entities. For its part, the minimum cash position is estimated to be in excess by the equivalent of 0.2% of deposits, in line with what has been recorded in recent months.

• In September, loans in pesos to the private sector continued to grow at a similar rate to that they have been showing since May, registering an increase of 3% ($12,370 million) and reaching a year-on-year expansion rate of 37.5%. Among the lines that showed the greatest dynamism, those mainly aimed at commercial activity (advances and documents) and personal loans stood out. Advances registered a higher increase than expected for this time of year, with a growth of 3.9%, which led to its year-on-year rate of change increasing 1.4 p.p. and reaching 28.9%. On the other hand, financing instrumented through documents showed an increase of 4.2%, among the highest this year, and its year-on-year rate of change remained at historically high levels (55.6%).

• The Central Bank’s policies aimed at inducing banks to expand the loan portfolio to MSMEs, including the requirement to grant at least 50% of the Credit Line for Productive Investment (LCIP) to this type of company, have been registering satisfactory results. The most outstanding data is represented by the evolution of financing of 3 years and more with a term that had a negligible weight and, as a result of growing at very high rates in the last year, doubled their participation in the amounts granted between the second quarter of 2012 and the third quarter of this year.

• A new tender was held during the month under the Bicentennial Productive Financing Program (PFPB). On this occasion, $570 million were auctioned, of which $550 million were awarded. The total funds disbursed since the beginning of the PFPB amounts to $5,572 million, which represents 73% of the amount awarded.

• Money market interest rates again showed dissimilar movements in September. Those paid by financial institutions to depositors showed a slight increase. On the other hand, the monthly average interest rate on signature documents stood at 20.7%, falling 0.2 p.p. in the month. Mortgage loans granted to families also fell, while those of the rest of the financing lines showed limited increases.