Faced with forecasts of an increase in inflation, savers wonder if it is convenient to make a fixed term UVA, what are its risks and what will happen to the dollar
With the new year and the new projections of inflation, savers once again take the calculator out of their pockets and wonder if the interest rate what pay the Fixed deadlines you will win to price rise of Economy.
That is to say, precisely, the main question is if it is more convenient to carry out a fixed term adjusted for inflation or trying to buy Dollars.
It should be remembered that access to the official exchange market is quite limited by the stocks, which only allows you to buy up to u $ s200 per month to those savers who can justify their income. And the other channels have greater access difficulties for several Argentines.
Regarding the expectations of inflation, in the latest Market Expectations Survey (REM) carried out by the Central Bank, it is stipulated that the increase of prices for him 2021 would reach levels of almost 50%. So it would exceed the 36% that was last year by 14 percentage points.
“This is based on a set of variables, as there will be no type of quarantine strict, consolidating the level of recovery in activity, with some sectors rebuilding margins“, alert to iProfessional Roberto Geretto, chief economist at CMF wholesale bank.
It is also expected that both the official dollar Like the wages will not lag behind the inflation.
In addition, a higher inflation by monetary issue that there will be to finance the treasury, “where the primary deficit would be around 3.5%, below the 4.5% budgeted but also implying a considerable monetary issue”, Geretto graphs.
And, especially, unlike 2020, another of the alarms of economists is that this year starts with a degree of monetization in high levels.
“However, the market has somewhat slashed its projections for inflation, where there is greater consensus than certain heterodox measures, such as price agreements, frozen rates, among other variables, can help in the short term to reduce inflation “, projects Geretto.
Although alert that this will bring higher costs at long term, as, for example, that it will bring a fall in investments and quality of public services.
Fixed deadlines: what is the preferred alternative
Regarding how the placements banking in this sense, it should be remembered that a traditional retail fixed term grants a 37% annual income.
“The rate of interest that provides, clearly, is located by below of the expectations of inflation“Geretto warns.
Is that for comparative purposes, a percentage of 37% annually implies level monthly about a 3.08% profit, a level that is very inferior at 3.2% inflation seen in November or almost the 4% in December past.
Therefore, a traditional fixed term offers a cost effectiveness what misses against price rise of the economy.
From the side of fixed terms UVA, which are those that adjust for the price increase index CER, there is a natural option placement which offers as a guarantee a coverage regarding inflation.
In this alternative it must be taken into account that the minimum period that is required to have the weights embedded in the bank is three months.
Specifically, if the price rise accelerates this year, as the trend in recent months showed, the fixed terms UVA would become the best alternative.
“Assuming that the 50% inflation scenario for 2021 is indicated by the REM, the return measured in TNA (Nominal Annual Rate) for the fixed term it would be 51.5%, much higher than the traditional fixed term (37%) “, recommends Geretto.
Risks that arise
Now the expectation of high inflation For all of 2021 it may not behave in a linear way, and it may only accelerate in certain months. Fact that can affect the performance of a placement that follows prices.
“A risk that we are usually consulted is what happens if in some month inflation is lower than the rate offered by a fixed term traditional. In that case, there is the option of fixed term pre-cancelable UVA, which finally pays the rate of a normal fixed term if it is withdrawn before 90 days of incorporation “, suggests Geretto as coverage.
Hence, the advice economists give is to go comparing month by month Which of the Fixed deadlines is winning the race between rates compared to the inflation.
Other risk to which savers may be exposed is in the case that intervene he INDEC, in the sense that for some other matter the organism stop measuring the inflation “correctly“.
“In that case, there is not only the option to pre-cancel the fixed term, but in the worst case only would be affected partially the interest payment, while capital would not suffer a (nominal) fall, as would happen in that scenario with CER bonds “, compares Geretto.
Finally, it highlights that unique “against” that cannot be counteracted is liquidity, since a pre-cancelable UVA fixed term requires that the immobilized capital at least for 90 days, so that it grants the UVA inflation plus 1% premium. Therefore, the latter is an instrument intended only for investors with that time horizon.
Inflation or dollar?
When makes the classic comparison regarding whether it is better to invest in dollars or in a fixed term adjusted for inflation, the answer has its variations.
“In a intermediate base scenario, that is, where chaos is not projected where the dollar jumps, nor is there an excellent macro performance that makes the dollar fall behind due to a large demand for pesos, it is logical to assume that he dollar will follow the inflation“sums up Geretto.
In this case, it details that the fixed term adjusted for inflation would not lose value in Dollars, but, on the contrary, “it would be advisable to have a proportion of the portfolio invested in this instrument to obtain a real return in pesos and diversify the investment portfolio” .-
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