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Argentine Banks Hike Deposit Rates as Executives Warn of Liquidity Squeeze

Average 30-day fixed-term rates have climbed back into the low 30s, with caución bursátil volatile near 40%, prompting banks to warn that funding pressures will curtail lending.

(FILES) In this file photo taken on June 18, 2018, traders look at a screen at the Buenos Aires Stock Exchange. - The Merval index of the Argentine stock market ended a 10-round bullish streak on Wednesday January 18, 2023 with a fall of 9.73% to 235,372.41 points, which analysts attribute to profit-taking after government announcements of a bond repurchase in Dollars. (Photo by EITAN ABRAMOVICH / AFP)
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Overview

  • Banking executives report that 30-day fixed-term deposit rates now average around 30.5%, with individual offers ranging from the high-20s to mid-30% across branches and digital channels.
  • Major lenders including Banco Nación, Galicia, BBVA and Macro reversed mid-July cuts by raising their nominal annual rates, some back to pre-July-3 benchmarks.
  • Caución bursátil has stabilized near 40% after surging above 70% in early July when the termination of LEFI instruments released excess liquidity.
  • The Treasury and BCRA have launched emergency auctions to absorb roughly ARS 5 trillion since July 10, aiming to contain peso volatility and manage system liquidity.
  • Banks caution that persistently high funding costs are draining liquidity reserves and could significantly reduce new loan issuance by month-end.