Fixed terms: the stock grows despite the fact that the BCRA has not raised the rate for almost 3 months

It should be remembered that this dynamic began to take place with more force since August, when The Central made a strong upward adjustment of the rates and raised the rate of the traditional fixed term by 8.5 percentage points to 69.5%, which was equivalent to an effective annual rate (TEA) of 96.5%. Thus, a monthly rate of 5.79% was established for fixed terms of up to $10 million. The objective was clear: to contain the demand for dollars by encouraging investments in pesos.

The measure was also aligned with the objective of seeking to achieve positive real rates with respect to inflation agreed with the International Monetary Fund (IMF), but the increase applied fell short of inflation in July, which was 7.4%, and also in August, which was 7%. Due to this, the BCRA considered it necessary to increase it once more to bring them closer to positive territory.

Consequently, on September 16, it ordered a rate hike of 550 points to 75%, which is equivalent to a Annual Effective Rate (TEA) of 107%. With the new TNA number, the effective monthly rate (TEM), which became 6.25%, below August inflation, but in line with that of the following three months, which was around 6 %.

Fixed terms: the variables that encouraged the growth of the stock

That triggered interest in fixed terms, especially by companies, which are the ones that increased the most. And it is that, as described to Ámbito, the director of Analytica, Claudio Caprarulo “There is a modification of the portfolios as a result of the increases in interest rates implemented by the Central Bank (BCRA)”.

In fact, investor reaction to every move in rate that it applied was instantaneous: the most forceful jumps in the stock occurred the day after the Board of Directors made the decision to speed up the normalization process of the monetary policy rate. Thus, on August 12, one day after the BCRA raised the rate sharply, when the stock climbed 1.83% and, on September 16, it hit a daily jump of 4.16.

As mentioned, this growth of fixed term deposits it occurred more strongly in the placements of large investors. Yes ok increased 44.6% since July 28, in the segment of deposits of more than $20 million, the increase was 49.5%.

This dynamic is also encouraged by the fact that there is an index of inflation high, but stable at around 6%, which means that the performance of the fixed term has been almost flat so far. In this context, he points out that “companies have more incentives to take what used to be sight deposits towards fixed terms.

It also notes that this is encouraged because the interest rate current of traditional fixed term it means that it is not necessary to go to the UVA, which forces you to wait 90 days to have the funds available. “Thus, after 30 days liquidity is already available,” says Caprarulo.

Consequently, the other side of this greater appetite for fixed-term deposits is a drop in deposits that adjust for UVAwhich since July 28 fell by $44,069 million, representing a drop of 21.2%.

And, finally, the director of CyT Asesores Económicos, Camilo Tiscorniaprovides another variable that encourages this dynamic, the stocks. “The increase in interest rates affects the increase in the formation of fixed terms. In fact, there were times when they grew above 10% per month, but also, due to the restrictions on access to the dollar, companies and mutual funds do not have much more to do with the pesos than go to a fixed term”, he thinks. That, according to his view, generates a minimum floor of funds for these capitalization instruments.

Fixed term: what is coming for these investments

With these data on the table, the balance of time deposits, at constant prices, is currently at its highest level in historical termsY as a percentage of the Gross Domestic Product (GDP) the ratio is 7.5%, one of the highest records in recent years. The downward trend in inflationary dynamics, which would be around 5.8% in November, would help to continue intensifying this trend, according to analysts.

But, on the other hand, Caprarulo warns that “we will have to see what happens in December, especially since companies usually need more liquidity for the bonus payment and end-of-year bonuses, so we can begin to see an outflow of some fixed-term funds for that purpose.” Thus, in the words of Tiscornia, we may begin to see a rebound in sight accounts and a slight drop in fixed terms. It will also be necessary to be attentive to what is available in the coming months the BCRA regarding the rate.

Surely he won’t change it until next year, when, if he makes the downward path in the inflation, it could begin to think about a gradual reduction of the index, as some analysts suggest, to encourage economic activity, but, for this, it will have to wait to show that the downward trend in prices is consolidated. Just then, could you think of a strategy of that style.