In the midst of the exchange rate strain, exacerbated by the dramatic sell-off of currencies in the official market this month, both the financial sector and the government are starting to look closely at the evolution of dollar deposits in banks, a true thermometer in times of crisis.
Since Sergio Massa announced the forced swap in the public sector, there have been some drawdowns in entities, although it is noted that the system has record liquidity. “The measure of ‘fit’ that Public Organizations have to sell dollar income to the official dollar, it has brought noise and we will have to return to focus on dollar deposits”explained the economist Fernando Marull.
He stock of dollar deposits of the private sector reaches 16.197 million dollars, according to the latest -provisional- data available at the Central Bank. Although they are 50% of what was in the Institutions before the post-PASO crisis of 2019, in the Municipality they underline that “the system is very liquid” and banks are able to meet the withdrawals of savers, in case they want to withdraw their dollars from their accounts.
With some fluctuations, the stock of dollars in banks has remained almost stable for at least two years. However, in times of economic uncertainty and political tension, such as those experienced this month, it’s where to real drip. On Wednesday, the day the Economy Minister announced the debt swap via DNU, deposits amount to US$ 16,380 million.
This Thursday, the figure dropped to $16.197 million. This is in the last five rounds of trading, 183 million dollars have flown out of the banks, just over $36 million a day. In the banks, although the liquidity and stability of the system stand out, some alerts have come on. Entities required physical tickets to be able to respond to their customers if withdrawals have grown.
“The Argentine financial system has become an asset that contributes to stability, even in difficult contexts. In recent years, it acted as a buffer and not as a propagator of the periods of volatility experienced by the country. Transmit trust, certainty and solidity”, they said in a bank. In another institution they highlighted that there have been no significant movements in the last few days.
In a foreign-owned private entity they ensured that dollar deposits remained stable. “The foreign currency liquidity of the Argentine financial system is currently over 80% e there is no currency discrepancy. Another show of strength of the system,” they said.
The last time dollar deposits went down was in the race against the peso that originated with the resignation of Martin Guzman to the Ministry of the Economy last July. At that time, US$850 million left the banks and the stock fell to US$14.46 billion. With the passing of days and the “normalization” of the foreign exchange market, savers have returned to bring dollars to institutions.
“The bulk of the deposits came out with Macri. In this government there have been two moments of nervousness: people get scared and go to the bank to get the money. It happened at the end of 2020 and 2021. But when they go, they withdraw and the tremor passes, they also bring them back. Today it is not a concern for the banks, the system is liquid,” they said in another entity.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.