The weight fights in the banks

The weight fights in the banks

Fixed-term deposits in pesos from the private sector -traditional and UVA- grew 17.5 percent in the last two months, a percentage higher than the inflation that different consultants project for the June-July two-month period, before the rate hike of this last week, according to data from the Central Bank.

Traditional fixed terms reached 5.211 trillion pesos on July 26 -the latest data available-, 16.8 percent more than on the same date in May, while “UVA”, which adjusts for the consumer price index that relieves the Indec, they reached 398,426 million, 28.8 percent more than at the end of May.

The increase in deposits in pesos occurred despite the strong rise in financial dollars, which between the first days of June and the beginning of last week, went from around 210 to more than 340 pesos, an increase that triggered the rise in prices of consumer items and that, according to calculations by different consultants, would bring July inflation to around 7 or 8 percent.

In that case, the accumulated inflation of the last two months would be 13 to 14 percent, almost four or five percentage points below the increase in time deposits, a figure that shows that, despite the challenging context, the Demand for assets in pesos in the banking system remains stable.

To help curb inflation and stimulate savings in pesos, the Central Bank applied an increase of 800 basic points in the interest rate last Thursday, the highest increase since the beginning of this government’s administration in 2019.

The interest rate on time deposits for individuals went from 53 to 61 percent per year for 30-day deposits up to 10 million pesos, which represents a return of 81.3 percent in effective annual terms, while the rest of fixed-term deposits from the private sector (individuals or companies) will have a guaranteed minimum rate of 54 percent, which represents an effective annual rate of 69.6.

The measure was coordinated with the Ministry of Economy, which on Wednesday also raised very sharply the interest it pays for its fixed-rate securities in pesos with short-term maturities and which, now, are part of the new interest rate structure with which the BCRA sets its monetary policy.

The corridor is made up of short-term Treasury Bills as the upper limit of the corridor (today at 90 percent of the IRR), the effective annual rate (TEA) of the 28-day Leliq (79.8 percent) as the average reference and the overnight pass rate as the lower limit (of 75% of TEA).

“The positive results of the latest auctions of debt instruments in pesos in terms of net financing strengthen the perspective of a decreasing stock of remunerated liabilities of the BCRA in terms of GDP,” the Central said.

The Treasury confirmed that it closed July with a net indebtedness of 372,000 million pesos and that, so far in 2022, it was able to refinance 130 percent of its maturities, a number in line with the objectives set in the agreement with the IMF.

Source: Pagina12

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