Time deposit rates at 18 per cent
Portada en Ingles
Banks strive to recover lost deposits. Those brave enough to open a 90-day time deposit are offered up to 18-per cent rates. In the meantime, dollar continues pulling back, after closing yesterday at ARG$3.04 in exchange agencies. The truth is that both those betting on dollar and rate will lose. With an annual inflation heading towards 30 per cent, both options entail a fall in purchasing power. What's once again evident from these annual 18-per cent yields in Argentine pesos is how unreal an 8-per cent official annual inflation is.
Different options are available in order to take advantage of rate increase. However, final yield will depend on the term accepted for freezing funds.
One of the main alternatives currently offered by the financial system and capital market are government bonds. Yields are already at a 25-per cent annual rate in Argentine pesos, but terms are considerably longer. Of course, it is also possible to sell them at secondary market any time. Bonds adjusted by CER have been lagging behind due to government's index manipulation and they experienced a strong price decline (fluctuating between 15 and 20 per cent during the first semester). Medium-term bonds, the most sought in market, are PRE9 (paying capital on a monthly basis since 2008) and BOGAR 2018.