Saturday , April 17 2021

With stable dollar and high rates, the fixed conditions in the pesos increased by 4% in May



The evolution of deposits in pesos is one of the variables that are closely monitored these days, and by economic consultants, by the bankers themselves and the government. For now, the signs are calming. Fixed conditions in May ended with a growth of 4%. With a dollar that rose 1.6 percent last month, rates reaching 4.5 percent during the month were sufficient incentive to encourage depositors to stay in the pesos.

Traditional fixed terms, plus those adjusted by UVA, ended with 1.2 billion on May 31, according to official Central Bank data, but at the end of April, the stock reached 1.15 billion. The $ 50,000 increase could be considered almost "vegetative", ie it is in line with the monthly interest paid by the banks, which are about 4% per month (slightly more than 50% per year). In other words, it can be concluded that there are no new placements on average, but the depositors least reinvest the interest they charge.

A curious fact is that traditional fixed conditions have increased – that is, at a fixed rate – but those adjusted by UVA have fallen. This is explained because the expectations are that inflation will decrease in the coming months, removing the incentives for this type of loan.

The behavior of deposits in pesos is one of the most sensitive variables for the financial sector in these hours. But also from the economic team, the movement of depositors is monitored every day. If there is a decrease, the fate of those pesos would automatically be the purchase of dollars. But to the degree to which stability is maintained – even when expansion is not significant – implies that there is less "fuel" for working on the exchange rate.

One of the measures adopted by the Central that gave good results was to promote competition on fixed terms between banks, enabling them to subscribe to this type of savers products that are not clients of the entity. For this purpose, an online platform has been created that will allow fast movement of money from one bank to another. As reported yesterday Infobae, for a month there were 34,000 operations for more than $ 6,000 million.

The result was a significant increase in interest rates to attract new savers. The nation, the main bank of the system, went out to pay annual rates of 55% above the expected inflation and several points more than the average of the system. And infected other entities.

In this way, the Central Bank managed to relay relatively the rates Lelik pays to the banks (over 70%) for small savers. This is a key fact, as the government requires depositors to stay in local currency instead of running against the dollar.

So that deposits in pesos are not falling It is important that the dollar rises less than the interest rate. It is to say that those who bet to undertake hard currency performance achieve this in these pre-election months.

In several banks, they carry out simulations of the impact that the fall in deposits may have against the dollar. According to a foreign subject, if the fixed conditions fell by 30%, the Central Bank should go out to sell about $ 9,000 million to avoid a strong impact on the currency price.

For now, and two months before STEP, the system looks relatively "balanced". With rates close to 55%, deposits in pesos grow at the same rate and at the same time this allows the currency to remain controlled. Will it reach the election? It is difficult to know, given that, as the elections begin, an upset will increase and the dollarization of portfolios will be encouraged.


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