January saw the second biggest monthly peso depreciation in 17 years
The peso depreciated by a powerful 2.36% in January. With the exception of July 2020, this was the highest monthly rate of depreciation since 2007. While there is a seasonal element, since January has frequently shown strong monthly exchange rate depreciation, there may also be factors associated with the electoral cycle, and the reduction of the local and international interest rate differential. Interannual depreciation in January was 3.87%. Concomitantly, in January the net international reserves of the Central Bank decreased by $ -1.1 billion, from December 2023.
Preliminary Central Bank figures indicate that annual GDP growth in 2023 was 2.4%, and that in December 2023 economic activity grew 4.7% y/y, its highest level in 2023. In turn, interannual inflation in January 2024 was 3.32% y/y, managing to fall below the inflation goal of 4% annually.
Credit continued to expand in January at a rate above 20% y/y, despite the growth in bank interest rates. The monetary policy rate has remained unchanged since November 2023 and, with the exception of Central Bank certificates, monetary aggregates have tended to reduce their expansion rate from the H2 2023 rates.
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