It is worth remembering that in mid-December, the central bank (BCRA) located in a 9% monthly the reference rate, generating that the return perceived by the Fixed deadlines be negative compared to inflation expectations, which are almost three times that value (27%). Likewise, the organization arranged the extension from 90 to 180 days of the minimum term for UVA deposits (tied to inflation), which represent just 0.4% of the total term placements, so a quick recovery is not expected of these instruments.
In this context, the consulting firm 1816 maintains that in December fixed terms fell by 21.2% in real terms (taking into account the inflationary variable). In line, Labor Capital & Growth (LCG) indicates that the placements in pesos fell 25.4% real in that same month, configuring “the most marked fall of that instrument in two decades”. In annual terms, fixed terms plummet 45% real.
In this way it can be seen that the assets and liabilities of the financial system continue to shrink in real terms. “Since there is a clamp, this is exclusively due to the effect of liquefaction“, they assure from Econviews and then add: “It doesn’t look like this will change in January or February.”.
According to the survey done by Ambit Regarding fixed terms, the nominal fall of this instrument in December was more than 5%. Besides, Its renewal rate also registers a decrease compared to the last three years.
“Currently, the rate is 16% less than the average and 6% below the renewals last November,” they say from LCG.
Fixed deadlines: behind the fall is the Government’s blender
This is because the new Government proposes a substantial change in the monetary approach, moving away from policies implemented in previous years. Its apparent objective is to reduce monetary emission to zero intended for fiscal support. However, this strategy could be insufficient to eliminate restrictions in the exchange market, given the existence of a considerable stock of remunerated liabilities.
In this situation, various strategies have been explored to gradually dry out the circulation of pesos, such as leaving the monetary policy rate in negative territory. However, and despite these efforts, the first weeks of management have witnessed significant levels of monetary emissionwhich raises questions about the effectiveness of the measures adopted to achieve the stated goal, but that is another topic.
Fixed terms: what to expect, the effect on the banks and the blow to the saver
As the economist explains Federico Glustein In dialogue with Ámbito, fixed deadlines are falling, liquefying, “while dollar deposits grow”. This implies that banks not only lose in real terms due to the escalation of inflation, “but nominally, since part of the cheap financing base falls” that financial institutions have.
For the business advisor and economics expert, Salvador di Stefanothe interest rate offered for fixed terms, although it appears to be high, fails to compensate for the expected inflation, “resulting in a significant loss of purchasing power of those who keep their money in these types of instruments.”
Di Stefano slips in statements to this medium that, according to his view, this situation entails a policy that weakens the value of savings accumulated by citizens, especially affecting retirees and savers who relied on this mechanism as a reserve for unforeseen events or health emergencies. “Really what is being done with the fixed term rate and inflation is incredible. Because it ends up harming the saver and they should know that if there is no saving, there is no investment, which is why the Government, with a policy like this, shoots itself in the foot.”, he comments.
Joel Lupieri, from EPyCA Consulting, adds that negative interest rates are causing investors to look for other investment alternatives. Something that is evident with the increase in demand for dollars as a refuge.
For Lupieri, it is unfeasible to risk ““To what extent can the savings be liquefied”, but it is clear that this limit will be given by the exchange rate tension that is generated, since this limit will be determined by the pressure on the exchange rate. Likewise, the galloping advance of inflation, not controlled by interest rates, “will test the control capacity of the duo formed by the Minister of Economy, Luis Caputo and Santiago Bausili (BCRA) in this situation”.
What the analyst means is that, as inflation and exchange rate volatility increase, there is likely to be an increase in nominal interest rateswhich will ultimately influence the returns of the Fixed deadlines.
Thus, everything would indicate that the bleeding of these instruments will continue as the rate remains negative in real terms, that inflation continues its course and that the dollarization and indexation of portfolios acceleratesaccompanied, of course, by a lower demand for pesos.
Source: Ambito
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