The inflation data for March confirmed, finally, the worst monthly number of the Government of Alberto Fernandez and the highest official figure for a single month since the restoration of the Indec statistics. To find a greater variation, you have to go back to the private indices that covered the statistical blackout that was from 2007 to 2016 or to April 2002, when prices advanced at a rate of 10.4 percent.
The Central Bank reacted to the March number with a rise of 250 basis points -2.5 percentage points- for the reference interest rate, which went from 44.50% to 47%. And also, as usual, it adjusted upwards the minimum returns that banks must offer for fixed terms of individuals for up to $10 million.
From today, 30-day deposits will pay a nominal annual rate of 46%. In effective annual terms, a figure that is arrived at by calculating the yield of subscribing to 12 fixed terms in a row, each time reinvesting both the capital and the interest that is received month by month, the result for savers thus amounts to 57.10 per hundred.
So, How much can a person who places a fixed term with this new rate expect to collect in interest?
Taking an initial investment of $100,000, the 30-day yield of the new nominal annual rate of 46% is equivalent to a direct yield of 3.833% in the month. So, whoever places that figure on Monday you will receive 30 days later $103,833your original $100,000 plus $3,833 in interest.
With inflation expectations for March of the order of 5%, this return is not enough to protect the purchasing power of the initial capital. So far this year, however, thanks to the drop in parallel dollar prices such as the free dollar or the MEP, that performance does imply a gain in dollar terms (no doubt a strategy of carry trade risky, especially because it is done with 30-day vehicles, but so far successful so far in 2022).
In effective annual terms, meanwhile, If the rate of 46% remained stable for a year and the saver in the example made twelve consecutive 30-day fixed terms, renewing both principal and interest each time, he would end up with $157,045 within 360 days. that is, the original $100,000 plus $57,045 in interest.
How does it change from the rates that were offered until Wednesday?
Before the latest rate hike by the Central Bank, retail time deposits had to pay a nominal 43.5% annual rate.
Thus, the same initial capital of $100,000 will give those who made a fixed term last Wednesday a result of $103,625 in 30 days. Barely $208 less than what those who place their deposits will receive from next Monday.
In effective annual terms, meanwhile, the same strategy of placing consecutive fixed terms for an entire year resulted in a theoretical annual yield of $156,730 as of Wednesday, regarding $3,733 less in interest than it can expect to receive from now on. That if: it should be clarified that the hypothetical saver who closed a fixed term on the same Wednesday, if he renewed within 30 days, would already be receiving the new rate.
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