Currently, the reference interest rate of the traditional fixed term is located at 133% TNA and 255% TEA, which consists of an inflation of 11% monthly.
While waiting for the new inflation data for October and two weeks before the ballot, savers are wondering what the future of rates will be and what should be done with the pesos at least until December.
Currently, the reference interest rate of the traditional fixed term is located at 133% TNA and 255% TEA, which consists of an inflation of 11% monthly. With this measure, the monetary entity sought to encourage savers to leave their pesos in Fixed deadlines and, thus, alleviate the pressure on parallel dollars. However, the market is already analyzing what will happen not only this month but also in December and part of January: it all depends on who wins the contest and what will happen to the dollar.
According to LCG estimates, October inflation will be around 9.5% monthly, while he maintains that in November it could return to double digits due to certain exchange rate instability in the run-up to the ballot.
According to the consulting firm, the current fixed-term rate in the very short term “is positive in real terms.” “In any case, we do not rule out a rebound in inflation towards the December-January two-month period, once a series of relative prices – TC and rates – are corrected, which could drive a new rise”.
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Mariano Fuchila
UVA vs. traditional fixed term: which is best after the runoff?
According to the LCG analysis, “in the comparison PF UVA vs traditional, The first would involve immobilizing the capital for three months while the traditional one grants a greater flexibility regarding its liquidity. In that sense, if a traditional placement was renewed for 3 months, the yield would be 37% subject to possible rate increases.”
On the other hand, due to the methodology of CERin case of constituting a UVA today, “January inflation would have no effect on it, so the yield would be equal to the traditional option, according to the current inflation projections in a scenario of continuity like the current one,” they maintain.
Finally, LCG highlights that the yield in pesos naturally competes with the dollar. In this framework, he emphasizes that “postponing a exchange rate correction seems unlikely.”
“The unknown will be whether this correction will be accompanied by a stabilization plan that will allow the exchange gaps to be compressed or whether the next government will bet on a scenario of continuity,” he concluded.
Source: Ambito
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