A good time to hedge WU, MG, and other money transfers with a plazo fijo?

sneakrnet

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If you live in Argentina, have an Argentine bank account, and do periodic money transfers from another country to pay your living expenses, it could be a good time to transfer a few extra pesos and put them in a plazo fijo (an interest bearing instrument that you can buy from home banking; you decide the amount and the number of days).

After the latest hike in interest rates by the Banco Central, a traditional plazo fijo is paying 6.1644 for 30 days. If you did a transfer to your bank account here today at 300/dollar (today's WU rate is 298 and MG rate is 298.78, excluding fees), and you put the money in a plazo fijo for 30 days and reinvested it every 30 days, you would have funds equivalent to a dollar rate of:
  • After 30 days - 318.49
  • After 60 days - 338.13
  • After 90 days - 358.97
I've transferred part of what I'll need for the next three months and put it in a plazo fijo. What I don't need at the end of the month I'll roll into the next 30 days. Yes, the dollar could spike up to 358.97 tomorrow, but the government is trying to hold down the "dólares libres (CCL, MEP, dolar blue, etc.)," and if they're even moderately successful, this should work out all right. In any case, the interest rate they are paying should protect me from most or all of the inflation of the next few months.

And in Argentina, the next few months is about as far ahead as you can ever look.
 

jlynch

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Normally the start of December to start of May is the best time for plazo fijo. In December there is demand for pesos for holidays, and the dolars from the cosecha start coming in. This year is slightly different with the world cup from 20th of Nov to 18th of Dec (demand for lots of dolars in qatar?).

an interesting chart mapping CCL against the dolar ahoro/solidario. Would be nice if it had the plazo fijo interest rates there too!
 

jblaze5779

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I guess you could absolutely protect yourself from inflation by only transfering when you need it. This plaza fijo is probably a good idea if you have pesos and no dollars. If you have dollars just leave them in the US until you are ready.

Protip: the government is never successful.
 

ArgentinaVet

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The only plazo fijo that keep up with the rate of inflation (and actually beats it by 1%) is called a Plazo Fijo UVA; these yield the rate of inflation as reported by INDEC +1% annually. Banks do not want to offer this product and some have even resorted to taking this product off their home banking menu and requiring customers to go into the branch to get access to the product. However, it is still available because the banks are required by law to offer it.
 

sneakrnet

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I guess you could absolutely protect yourself from inflation by only transfering when you need it. This plaza fijo is probably a good idea if you have pesos and no dollars. If you have dollars just leave them in the US until you are ready.

Protip: the government is never successful.
Transferring only when you need money does not protect you from inflation. Using that strategy from November, 2020, for at least the next 15 months produced terrible results against inflation. Also this year until Guzmán quit. Of course, the traditional plazo fijo option was not very attractive then, either.

Also, I've been here more than 18 years. In the long run during that time frame (obviously), the government has never been successful. But there have been many intermediate stretches (six months or more), especially in election years, when they've been able to bring the dollar down or at least stabilize it (referring here to the "free dollars" [CCL, MEP, blue], collectively).
 

sneakrnet

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The only plazo fijo that keep up with the rate of inflation (and actually beats it by 1%) is called a Plazo Fijo UVA; these yield the rate of inflation as reported by INDEC +1% annually. Banks do not want to offer this product and some have even resorted to taking this product off their home banking menu and requiring customers to go into the branch to get access to the product. However, it is still available because the banks are required by law to offer it.
I was experimenting with the plazo fijo UVA in home banking and it seems that the minimum term is 120 days, and I didn't want to tie up the money in pesos for that long. (It may be possible to get a shorter term, but I couldn't do it.) That's the reason I chose the traditional plazo fijo.
 
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Neil

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I was experimenting with the plazo fijo UVA in home banking and it seems that the minimum term is 120 days, and I didn't want to tie up the money in pesos for that long. (It may be possible to get a shorter term, but I couldn't do it.) That's the reason I chose the traditional plazo fijo.
Brubank offers A 30 day option...
Screenshot_20220921-075011~2.png
 

Rich One

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Today some Plazo Fijo Deposits yield 100 % for a year tenure.

An expert suggested to contract a Plazo Fijo for say 100,000 pesos Every month and renew every month for a year . So a year from now you start receiving 100,000 pesos a month every month..!
Then you withdraw your original investment and leave the interests , and so forth..! Golden Eggs Nest? Assumes the Interest on Plazo fijos stay constant or goes up..?
 
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