Interest rates experienced an unprecedented increase during the Alberto Fernández term in 2023. After resisting for years to increase the yields of deposits in pesos, the Central Bank, led by Miguel Pesce, **raised the minimum rate that banks must pay for retail time deposits by 22 percentage points.** This led the nominal yield of the 30-day deposit to reach 97% annually, although accompanied by an acceleration of inflation that registered a monthly record of 8.4% in April, which diluted a large part of the real result obtained by savers.

With half a year gone by, **it is time to evaluate how savers who opted for the more conservative retail alternatives to protect their savings, such as fixed terms and the dollar, fared.**

The current rate of return of 97% in the fixed terms is equivalent to a direct monthly effective interest of 7.97% in 30 days. However, this rate was not in effect throughout the year.** It started at 75% per year and in April it had already reached 78%**. It was not until mid-May and early June that depositors began to enjoy the current full rate. Consequently, **the return on bank deposits gradually increased.**

To make a proper comparison, it is important to consider the result that would have been obtained by making six consecutive fixed terms and renewing the principal and interest monthly. Thus, savers benefited from rate hikes and the effect of compound interest.

For example, **An Argentine who had deposited $100,000 on the last business day of 2022 and renewed both the principal and interest every 30 days, would currently have a total of $147,761.70. This represents a cumulative return of 47.76% in six months.**

The result would have been different if the saver had chosen to keep their savings in dollars. In the free market, that same person could have bought USD 289 on the last business day of 2022 in exchange for the same $100,000 pesos. This was because the selling exchange rate was $346 that day. After six months, the dollar is trading at $493 for sale. However, **If the saver wanted to convert his dollars to pesos, he would use the buying rate, which is currently $488 per unit.**

Consequently, **the saver who opted for the free dollar would have turned his $100,000 into the equivalent of $140,173.41, which represents a return of 40.17%. This is more than 7 percentage points below a fixed term deposit.**

The saver’s outcome would have been different if they had opted for the MEP dollar or other options. For example, in the case of the MEP dollar, **Your original $100,000 would have become $144,963.62, which represents a return close to 45% and is closer to the return of fixed terms.**

Although the data for June is not yet known, private measurements suggest that it will be around 7% or even a little less. If June inflation finally reached 7%, both the dollar and the time deposits would have lost out to the price increase. Accumulated inflation would thus reach 52.15%, exceeding the yield of almost 48% of fixed terms, 45% of the MEP dollar and also 40% of the free dollar.

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