The BCRA reminds users of the options available for saving in pesos. At present, there is a wide range of instruments with different yields. For instance, time deposits adjusted by units of purchasing power (unidad de valor adquisitivo, UVA) with yields above inflation.
The BCRA establishes a minimum interest rate for certain time deposits seeking to encourage retail depositors’ savings in pesos. These banking products can be quickly and easily obtained through electronic channels, which relieves users from going to a bank branch.
Financial institutions provide a link corresponding to the profile of each investor. Based on a set of questions, depositors can decide on the degree of risk they expect to take: conservative, moderate or aggressive. According to their profile, depositors can choose any of the options available in the financial system.
Some of the instruments are:
· Early-payment UVA time deposits
The BCRA has launched early-payment UVA time deposits as an investment option that yields a positive real interest rate. The minimum yield for these deposits is 1% annually over the inflation rate if deposits are held for the full term of 90 days.
The special feature of this product is that depositors may opt for the early termination option once 30 days have elapsed. If the money is kept for the full term of 90 days, depositors get an interest rate equal to the consumer price index reported by the National Institute of Statistics and Censuses (Instituto Nacional de Estadística y Censos, INDEC) plus 1% annually, which allows them to keep their savings' purchasing power and have gains over the inflation rate by one percentage point. Banks taking time deposits must offer this investment option to all depositors through all the channels available, either in person at branches or through electronic platforms.
· UVA-adjusted time deposits
UVA-adjusted time deposits other than those involving early-payment option are locked up for a minimum term of 90 days and deliver a yield above inflation at a rate that varies across financial institutions.
· Traditional time deposits (minimum interest rate assured) The minimum term for this type of deposit is 30 days, with a minimum interest rate assured as set by the BCRA for retail depositors. The current minimum rates are available under the heading Main Variables in the website’s home page.
Non-clients of financial institution may also make time deposits. Check out here the interest rates that banks offer for online time deposits to choose the most convenient alternative.
Other financial investment products
Depending on the investor’s profile, there is a wide variety of options for saving in pesos. Capital instruments are available in most financial institutions’ home banking or through clearing and settlement agents (agente de liquidación y compensación, ALyC).
Some of these instruments are as follows:
· Government securities
They are also called sovereign bonds, and are issued by the public sector (national, provincial or municipal states). The principal amount may be reimbursed in installments—called amortizations—, or in full at maturity, at a fixed, floating or mixed interest rate. Although they can be held to maturity, investors may decide to sell them in the market at any time.
Securities and shares, among other instruments, may be traded in the capital market through banks, or through a negotiation and/or settlement agent registered with the National Securities Commission (Comisión Nacional de Valores, CNV), the body that regulates and supervises the capital market.
To start trading, investors must open a trading account with a bank or an agent. The proceeds from purchases are credited within 48 hours to a sub-account held by the investor at Caja de Valores—the depository of securities.
· Corporate bonds
They are debt securities issued by private companies. Where corporate bonds are sold to investors, the issuing company takes on obligations with bondholders, and agrees to repay them within a given period along with the applicable interest rate. Principal is generally repaid in annual installments or every six months, and yields returns at a fixed or floating interest rate. Corporate bonds may have a credit rating, which turns them into a safer investment. Companies may issue corporate bonds in pesos at a fixed rate or pegged to the dollar price. In the latter case, investors buy securities in pesos at the official exchange rate and collect the debt service in pesos at the official exchange rate at maturity. This lets investors make an investment in pesos while being tied to the dollar price.
· Investment funds
These funds provide investors with a diversified portfolio of assets—including markets and instruments which, due to distance or amounts required, are hardly available to small investors. The fund’s portfolio is administered by a fund manager that must be registered with the CNV in the registry of Management Agents of Collective Investment Products.
Investment funds may be subscribed though banks or registered ALyCs, in pesos, pegged to sovereign bonds, shares or assets in dollars. As with other investments, investors’ profile should be tested before choosing a fund according to the risk they expect to take.
May 8, 2021.