Dollar vs. fixed term: what investment won in August amid financial stress

The wholesale dollar, which is the one that acts as a reference for the market and over which the Central Bank has greater power of intervention – direct or indirect – advanced 1.7% in Augusta number below the performance of fixed terms, which yielded on average a 19.12% annually. In monthly terms it implied a rate lower than the exchange rate.

“August was a difficult month to beat the dollar,” he said. Nery PersichiniHead of Research at GMA Capital. “The saver who renewed at the end of the month has 1.8% monthly left today,” in a fixed-term rate, he estimated Justina Gedikianfixed income analyst at Cohen Aliados Financieros. “Among the alternatives, the month rewarded the most conservative: the Lecaps and the CER bonds yielded around 0.7% because the rate hike hit their price and they lost against the evolution of the exchange rate,” he explained. It depends on the bank, but the fixed term generally tied fairly or narrowly lost against the dollar.

Until a few weeks ago, the Government defended a “ceiling” of $1,500 for that quote – among other ways, by enabling a rate increase – but finally allowed it to exceed it. The quote for the saver ended the month at $1,535 at Banco Nación, 20 pesos above the value it had at the beginning of August.

The interpretation of the SBS Group is that the Government chose to allow a gradual movement of the exchange rate rather than validate persistently high rates.

“Our reading is that the government would be tolerating a gradual slide in the exchange rate rather than validate persistently higher interest rates,” the brokerage company said. The objective, according to this interpretation, is manage the “trade-off (disjunctive) between dollar and rates”.

The strategy also appears in the recent behavior of rates. After the maximum tension recorded the previous week, Grupo SBS highlighted the “continuity in the compression of rates in pesos”, that is, a reduction in the yields of instruments in pesos compared to the levels reached during the episode of greatest financial pressure.

The dollar, meanwhile, maintained an upward trend. The analysis of 1816 states that the Executive Branch considered that It was more expensive to bring rates up to 30% than to allow the dollar to exceed $1,500. But once that level was broken, the Government again intervened on expectations through the futures markets and instruments linked to the exchange rate.

“After surpassing that level, anyway, The Government continued to ‘mark the field’‘”, noted 1816. The consultancy highlighted that, with the fixing of the reference exchange rate for December 2026, “enormous volumes were observed in futures and dollar linked“, two markets that allow trading on expectations of the evolution of the dollar.

Despite the exchange rate tension, the Central Bank maintained a buying balance in the exchange market during August. Facimex Valores highlighted that the pace of foreign currency acquisition slowed down compared to July, but considered it favorable that purchases continue to be positive in a period that usually presents seasonal difficulties.

This week, the BCRA bought foreign currency at a average of US$ 44 million dailycompared to an average of US$ 36 million for August and US$ 103 million daily during July. For Facimex, the slowdown should not be interpreted as a deliberate decision to reduce purchases to avoid greater pressure on the dollar.

“This is something to be expected due to the seasonality of the exchange market,” the firm said. From that perspective, the relevant data is not only that the pace of purchases has decreased, but that the BCRA continues to accumulate foreign currency even at a time of the year when the supply of dollars is usually lower.

The behavior of the exchange rate must also be seen in perspective. IEB Group highlighted that the exchange rate correction remains limited in relation to inflation. “The exchange rate correction is far from being abrupt“says its report. The dollar accumulates an increase of just 3.7% so far this year, compared to an accumulated inflation of 19.6%.

Financially, the country risk experienced a rise of more than 20% throughout August. The month started near 415 points and ended at 513 units. The indicator produced by JP Morgan was pressured by a fall in bonds, partly for local reasons and by a thicker global financial climate.

Stocks were also not a suitable investment throughout this month. The Merval index of leading stocks fell 9.5% measured in peso and 11.4% measured in dollars. In the first eight months of the year, accumulated, it also registered a decline of 2.4% in pesos and 7.5% in hard currency.