In this sense, they continue with the growing trend that they have experienced since the beginning of the year. In April, according to the Central Bank’s Monthly Monetary Report, UVA deposits registered a monthly growth of 13.9% in real terms. Likewise, in March they experienced a monthly growth of 5.8% in real terms, which implied an acceleration of 2.9 points with respect to the expansion rate of February.
According to a report from balance, “In real terms, deposits adjusted for inflation have recovered their pre-2021 electoral dynamism, and have been growing 25% compared to December 2021, although they still represent less than 5% of private sector fixed-term deposits.” Consequently, they explain that “the greater participation of this type of placement is making banks prefer to cover themselves by buying indexed debt to the detriment of freeing up funding for loans.”
UVA time deposits gained prominence in this context since their price is based on the CER index – Reference Stabilization Coefficient – which is prepared by the Central Bank and increases in proportion to inflation. Its minimum term is 90 days and at expiration its value is updated based on the CER and it pays an additional nominal 1% per year. On the other hand, pre-cancelable UVA fixed terms have the option of withdrawing the money after 30 days, but the adjustment is made for a nominal annual rate lower than that of traditional fixed terms, so the money does not end. growing at the rate of the CPI.
Regarding the expectations of how deposits adjusted for inflation will continue in the coming months, Lucio Garay Mendezeconomist at Echo Go, considered that “the combo of high inflation and a Central Bank running behind when it comes to raising the interest rate” generates the incentives for the transfer from traditional fixed term to UVA fixed term. “The latest inflation data was higher than expected and these expectations are unanchored, that is to say, that there is no clear horizon on the disinflation path leads people to want to tie their savings to inflation. In parallel, there is beginning to be greater financial education and a more widespread dissemination of these savings instruments, but there is still a long way to go. There is a large part of the population that is not banked and that puts a ceiling on the UVA fixed-term stock”, he said.
However, he warned: “As long as there is no economic plan that provides predictability, it will be difficult for the demand for pesos to stabilize. In the meantime, inflation will surely continue to outpace the movement of the dollar, but this does not last forever; At some point, sooner or later, the real exchange rate has to be recomposed. In this context, deposits in pesos also have a high share of unpredictability”.
From Equilibra, they point out that “as long as inflation does not subside and uncertainty continues to grow as we approach the next elections, fixed terms adjustable by CER/UVA and traditional very short-term terms will continue to be preferred by retail investors”.
For its part, Roberto Luis Gerettoeconomist is CMF Asset Management, explained that the program with the IMF led to a de-anchoring of expectations since “the agreement does not limit secondary issuance, for example, issuing to buy reserves or disarm Leliq, to which are added the increase in rates and not being able to use the dollar as an anchor; this added to macro imbalances, lead to higher inflation”. And he stated that this context “makes UVA time deposits increasingly valued and continue to gain ground.”
He also added: “Other instruments to hedge are the FCI CER, which also protect against inflation. Also the sovereign bonds that adjust by CER, as long as they trust in the future repayment in a timely manner. And, of course, the dollarization of portfolios is the classic form of coverage, which will most likely be used more in 2023, as is usual in election years.”
Source: Ambito
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