You can invest in any instrument in pesos that reports some profit, but this profit must be high. How tall? At least greater than the variation in the exchange rate.
And as in the last month, the mep fellwe can hasten to infer that in October the carry trade was a good alternative.
In the following table we show examples of this strategy for different instruments, starting from the assumption that the investor has usd 10,000 and changes them to $302.5, obtaining $3,025,000, which places them in different alternatives. For example, if you had made a fixed term (TNA 75%)at the end of the investment he would have received $3,214,063, and buying back dollars at the mep of $292, would have obtained usd 11,007, a profit of usd 1,007, or 10%. Or you could have invested in December Treasury Bills and gotten a similar return. Not to mention if he had adopted a more aggressive strategy and invested in shares, taking advantage of the rally of recent weeks (double speculation: that the exchange rate is maintained and that shares rise). The profits would have been more than interesting.
Now, it is important to note that the carry trade it works whether the exchange rate stays the same or falls. In countries like ours, where exchange rate stability hangs by a thread, it is an extremely risky strategy since the month’s profit can vanish in one or two days.
How much should the dollar rise for this investment to be bad?
The answer is simple, the mep must rise more than what the alternatives yield in pesos. In other words, in October the carry trade would not have worked if the mep jumped from 302.5 to 322.5 (considering the average yield in pesos of 6.5%).
Do carry trade It is neither right nor wrong, it is a strategy for investors who can tolerate losses if the dollar escapes. They must be crazy in a flexible investment that allows you to undo the strategy in case they want to.
It worked in October, will it work in November?
Source: Ambito
