After knowing the inflation data for April, which was 8.4% monthly in April, The Government has defined a series of 9 measures, among which the decision of the Central Bank to raise the interest rate again from 91% to 97% stands out. Translated in favor of a saver, this means that henceforth the yield will banks will pay 6 points more to deposit money for a fixed term.
The Central Bank had already climbed 10 points, from 81% to 91%, after the currency run at the end of April. Now, the nominal monthly rate will thus rise to 8% and the effective annual rate to 152%.
The Nominal Annual Rate (TNA) will be raised to 97%, which only applies to deposits made privately owned for less than $30 million.
Even so, this yield is still below year-on-year inflation, which is already at 108.8%, the highest in 30 years.
Traditional Fixed-Term: How much you need to invest to earn $100,000
If the saver wishes to make a profit close to $100,000 with a fixed term of 30 days, he must invest $1.3 million. The profit in that case would be $104,000. At the end of the month, the investor will have in his possession: $1,404,000.
In other words, starting today, to obtain a monthly income of $100,000, a small saver will have to invest about $100,000 down than what I needed until yesterday.
After one year, if the Nominal Annual Rate (TNA) held constant at 97%, the investor would only be making profits nearly double what he invested. In other words, in 12 months, reinvesting principal only, without interest, you would earn $1,261,000.
If, on the other hand, every month – until the end of one year – he reinvests the capital plus interest, the profit would rise to 152%, i.e. leaving a total return of nearly $2. Thus, the total would be $3.3 million.
In April, a bank deposit paid an average monthly rate of 6.6%, which is well below the 8.4% inflation recorded in April that INDEC announced last Friday. The current yield number will also drop again if May inflation approaches 9%, as expected by analysts.
Traditional Fixed-Term: How much you need to invest to earn $200,000
To make a round profit of $200,000, you only need to invest $2.5 million. This means a $200,000 investment less than yesterday.
Continuing with the exercise, if the investor has kept that money tied up for 12 months fixed-term (renewing every 30 days), the total profit would amount to $2.4 million, taking TNA.
And if you instead factored in the annual effective rate, the 152% it pays today, that total would exceed the initial investment, leaving just $3.8 million in profits. After one year, the sum of principal plus interest would be $6.3 million.
Confirmation of the change in interest rates only came in mid-morning, which is why the change has not yet been reflected in the bank simulators, which little by little they will begin to update the rates.
Just as the fixed rate remains, beyond the rise to 97%, below inflation. It also loses against the dollar. In the past 30 days, the free dollar gained nearly 19% in pesos.
“Increasing the nominal rate to 97% per annum leaves a monthly rate of 8%. In other words, this increase continues below inflation as inflation for the month of April was 8.4% and there is nothing to suggest that inflation will be lower than in May. In fact, it’s quite likely to be closer to 10%,” Jeremías Morlandi, director of public policy at the Argentina XXI Center for Economic Studies (CEEAXXI), told Clarín.
And in this sense, he warned that “in this political and economic context, much more robust measures are needed a tepid rate hike to revive the demand for money, given that if it continues to fall there is no rate hike to fix it.
NS
Source: Clarin
