The Central Bank lowered rates but the returns on this instrument remain positive. What are the causes? Is it worth investing?
The Central Bank (BCRA) reduced the annual nominal interest rate to 35%, which caused a decrease of 4 percentage points in the yield of fixed terms. According to data from the organization, the average rate offered by financial entities for this type of deposits is 35.93% annual nominal. This is equivalent to a annual effective rate of 41.6%, considering the monthly renewal of capital and interest for one year, which represents a monthly return of 3%. Is it suitable as an investment?
Fixed term vs inflation
Compared to inflation, the ÍConsumer Price Index (CPI) registered 2.7% in October, lor that implies that the real interest rate is positive. YesIf monthly inflation remained at 2.7% for a year, it would reach a cumulative 37.4%, more than 4 percentage points below the effective annual rate of the fixed term. On the other hand, in a hypothetical scenario where monthly inflation stabilized at 2.5% for 12 months, the annual cumulative inflation would be 34.5%. In this case, the performance of the fixed term would maintain a positive real return of approximately 7 percentage points.
Fixed term vs dollar
If the comparison is made on the exchange rate. Those who invested in a fixed term throughout the year lost since the blue dollar, for example, only rose 12%. If observed with the MEP dollar, the yield is even lower: only 8.5%. However, this profitability is well below the inflation accumulated in the year, which reached 107%.
pesos parity salaries inflation
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The peso shines: why is it advisable to invest in a fixed term today?
A recent report from GMA Capital stated that “beyond the specific data published by INDEC, October also brought a joy for peso savers. The thing is, For the first time in a year, the rate in local currency exceeded the advance of the CPI. With this, the real premium for fixed terms was 0.7% monthly or 8.2% annualized. This reward was even greater in other instruments that are not only accrual, but also incorporate a capital result. The most outstanding cases were the Lecap (+8% nominal and +5.2% real) and CER bonds (+5.8% nominal and +3% real).”
“In macro terms, the fact that the short-term real interest rate is positive It is synonymous with the fact that pesos are now scarce. The reasons? The success of the economic plan in cutting off the most harmful sources of monetary emission linked to the public sector. Strictly speaking, the Treasury exhibits a primary surplus (2024 will be the first in 14 years), the Fiscal dominance over the BCRA was eliminated and the monetary entity’s balance sheet was cleaned up. At the same time, the exchange rate policy of crawling-peg of 2% monthly contributed to anchoring expectations that the official dollar would not be a problem for the CPI,” assessed GMA Capital.
Source: Ambito
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