2023-06-08 13:03:00
SUBSCRIBERS EXCLUSIVE
The pesos burn and the rate is not enough for them to stay in the banks.
Tightened by the jump in inflation in April. The Central Bank responded in mid-May with an increase of 600 basis points in the fixed term rate, which went on to yield 154.28% per year. Although the effective return may sound attractive, in an economy with the triggered nominalityrate adjustment did not achieve the effect searched: in may fixed terms fell compared to the previous month.
The increase in interest rates, which led to the monthly yield of this type of investment, the favorite of most Argentines who chooses to save in pesos, to overcome 8% monthly, it failed to seduce savers. According to data from the Central itself, last month term deposits in entities fell in real termsthat is, discounting inflation for the month, and 2.5% regarding the trademark they had registered in April.
The falls were registered in retail placements, which according to a last decision of the Central, reaches deposits for up to $30 million, as wholesalers. The first presented further contractionwith a real monthly fall of 4.5%, while placements usually made by large companies fell 2.1%.
Where did the pesos that left the banks go? A first hypothesis may be that savers sought currency hedge. However, during May the blue dollar rose just 3.3%to go from the $474 with which it closed April post-corrida to the $490, with which it ended last month. Financial dollars did rise a little more, but controlled by official intervention and the new provisions of the Securities Commission.
The pesos that were not renewed in the stock of the fixed terms did not remain in the banks either.. At a general level, private sector deposits in pesos fell 1.4% last month compared to what had been seen in April: in the year-on-year comparison they also show a contraction of 1.2% in real terms. This way, broke a positive streak which lasted from December of last year.
The pesos in sight accounts also fell: 7.2% real since May 2022. Although the drop last month was less than that registered in April. The 1.3% drop in this stock only shows how the trend deepens.
The pesos burn and the rate is not enough so that they stay in the banks. In the consultancy LCG they affirmed: “It is to be expected that demand deposits continue to evolve below the price level of the economydue to an acceleration of inflation that discourages the possession of liquid money. If the fall is not greater, it is because the increasing nominality returns handling physical money is increasingly cumbersome”.
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