Last Wednesday the INDEC revealed that in January inflation was 20.6% monthly and 254.2% year-on-year.
How to beat inflation: analysts recommend a combined strategy with two bonds
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Was published the inflation data for the month of January that although it reflected a slowdown compared to the figure reported the previous month, still continues at levels above 20% monthly. In fact, the latest Market Expectations Survey (REM) released by the Central Bank of the Argentine Republic (BCRA)maintained that The main consulting firms predict that the price increase will be 227% for the next 12 months.
Given this complex panorama, the IOL Investonline Research team considered that Positioning yourself in CER (inflation-adjustable) assets represents the best option to protect value against inflation since, in addition, they are low-risk fixed income assets. That is why they announced some alternatives that they believe can be useful to protect savings.
The CER bonds recommended by the market
- For the short term (Letter CER X20Y4): First of all, thinking about the short term, they suggested investing in the letter X20Y4 that adjusts its capital by the CER, thus managing to keep up with inflation. Given that in the universe of pesos there are no alternatives to hedge against expected inflation in the future (the market discounts double-digit levels for the month of January as well).
- * Medium term (CER T2X4 Bonus): bond that adjusts its capital by the CER, thus managing to keep up with inflation. Assuming that the level of inflation remains persistent and high, but with a downward convergence in the following months, this alternative will be providing a return that is vastly superior to the fixed term.
How is the new government’s plan going?
From IOL investing online they explained: “The increase in inflation, driven by the correction of relative prices (where the jump in the exchange rate stands out), also implies, a challenge for the 2% monthly crawling peg to which the BCRA committed. “The speed at which the exchange rate loses competitiveness makes the market see a relatively close expiration date for this slide, more specifically, March.”
This expectation of an increase in the official exchange rate is contrasted with a monthly interest rate in pesos that is around 8%. “The forecasts are still not positive as expectations cannot be anchored, and certain monetary policies may pull down the general price level,” they closed.
Source: Ambito
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