Punishment to farm rebels: dollar further down

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Argentine administration should stop losing reserves as of today. Grain exporters would sell dollars again, giving a breath of fresh air to a market where BCRA (Argentine Central Bank) has been the sole bidder. Will BCRA let exchange rate fall further down to punish those opting for freezing exports? Savers, without clear signs of a final agreement with farm, keep on looking for the American currency, the classic shelter.

Yields offered for time deposits posted a slight rise last week of nearly 3 percentage points annual. Average rate hovered around 16 per cent annual, which means that it's still equivalent to half the inflation estimated by private sector.

It's worth mentioning that, as of today, exporters are expected to increase volume of dollar sale, which would have an impact on interest rates.

Six months and a half of poor sales of exporters have already gone by.

Despite low real yields, great investors like pension funds resorted to time deposits to place their financial surpluses. Reason why it's not surprising to see that placements higher than ARG$1 million (agreed at BADLAR rate) were the ones growing the most in the last days.

Poll made by Argentine Central Bank (BCRA, in its Spanish acronym) shows that BADLAR rate climbed 16.3 per cent annual in pesos by the end of last week in public banks and 17.6 per cent in private ones. As regards placements in dollars, yields settled at 3.4 per cent annual in private banks and below 1 per cent in public ones.

For small and medium-sized savers, time deposits keep on being a refuge from public insecurity. In view of dollar stability and poor yields, they are used as safety boxes, which are for free and offer a return.

The survey carried out by the monetary authority shows that the average rate in pesos for a term of 30 days reached to 14.2 per cent annual; 15.3 per cent between 30 and 59 days; and 16.6 per cent for 60 days and more.

However, for deposits lower than ARG$100,000, the average yield falls to less than 11 per cent. Above such amount, 14 per cent was paid; and between half a million and a million of pesos, the rate climbed to 16 per cent annual.

One should take into account that private banks are paying 4 percentage points more than their public counterparts, while non-banking financial entities offer more than 5 percentage points.

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