MercoPress. South Atlantic News Agency

Uruguayan residents have 7.1 billion US dollars in overseas banks

Deposits of non residents increased significantly in Uruguay probably boosted by Argentines fearsome of political stability in their country.

Uruguayan residents’ savings in overseas banks totalled 7.1 billion US dollars in the last quarter of 2008, which represents a slight drop from September 2008 but 14% over December 2006 (6.25 billion USD) according to the latest report from the Bank of International Settlements, BIS.

Uruguay Central Bank officials believe the slight drop in overseas deposits could be attributed to a return of funds following the banking crisis in the US and Europe. Most Uruguayan holdings overseas are in European banks.

Local data shows that non financial sector deposits in Uruguay’s banks as of last December, both in US dollars and pesos, totalled 13.3 billion US dollars, which is 3.6% higher than in September (12.87 billion USD).

If non residents’ deposits are excluded, the increase of deposits in the banking system was 4.1% higher equivalent to just over eight billion US dollars. Non residents’ deposits also increased but 15.5% between September and December 2008, which is mostly attributed to neighbouring Argentines fearful of the political situation in their country. These funds totalled 2.46 billion USD.

Meanwhile in the first five months of this year deposits of the Uruguayan non financial sector (companies and families) continued to grow having reached 14.3 billion USD, which represents a 7.3% jump.

Non residents’ deposits also increased in the five months of 2009: 9.1% reaching 8.8 billion USD and so have investments in local equities, 9.5% equivalent to 2.7 billion USD.

“There are indications that the funds which left Latinamerica following the collapse of Lehmn Brothers last September are returning to the region”, said Alberto Graña, Economic Policy Manager of the Central Bank.

He added that monetary authorities are thinking of floating bonds in US dollars to avoid the impact on the local exchange market which reflects in the local price for the US dollar, appreciating the peso and hindering the export sector.