Banks in Argentina have once again lowered interest rates on fixed-term deposits, with some now paying less than 40% annually. Analysts pointed to a US Treasury bailout and a tax holiday for grain exporters as the main reasons for the cut.

Financial institutions operating in the country followed the Central Bank’s steps when, on Thursday, it reduced the rates on overnight repurchase agreements (repos) by 10 percentage points. This also led to a cut in rates for securities-guaranteed loans, which had soared to 80% earlier this month.

On Thursday, Argentina’s annual Wholesale Rate (TAMAR) for fixed-term deposits of AR$1 billion or more at private banks, with maturities between 30 and 35 days, stood at 44.2%. At the beginning of September, that rate was 67%.

Argentina no longer has a monetary policy rate, but the Central Bank trades in repos or simultaneous swaps, a source with the monetary authority told the Herald.

The Central Bank had announced in May that it would no longer set interest rates and instead let them be defined by “supply and demand.”

Consulting firm 1816 noted in a report that the government was able to take advantage of the positive change in market conditions generated by the U.S. bailout announced earlier this week.

On Wednesday, the U.S. Treasury announced it would purchase Argentina’s USD bonds and grant a stand-by credit line to the Milei administration. Treasury Secretary Scott Bessent added that the countries were negotiating a US$20 billion swap with the Central Bank.

Pablo Repetto, head of research at broker Aurum Valores, told the Herald that the rate cut was the result of the large inflow of foreign currency from agricultural sector exports, and not the U.S. bailout. Earlier this week, the government announced a tax holiday for grain sales abroad, which ended after exports reached the government-set US$7 billion quota in only three days.

Another broker, who requested anonymity, called the tax holiday “Massa-like,” in reference to former Economy Minister Sergio Massa, who in 2023 created an exchange rate called the “soybean dollar” at which the agricultural sector could liquidate its exports.

Repetto added that he does not think the interest rates have “completely normalized.”

“It’s probably going to be a little more complicated going forward, as the election approaches, even beyond the support of the United States, which has conditions, especially political ones, that are still unknown,” he said.

Gustavo Quintana, an analyst and broker for PR Corredores, said that “it seems we are moving towards more reasonable rates.” 

“These processes take a few days to stabilize, so we have to wait,” he told the Herald.