The dollar continues its dizzying week, scoring another day of big swings, a situation that complicates the Chilean peso, which this day became the most depreciated currency in the world.
The US currency started with a slight rise from Tuesday’s figure, but quickly dropped its value, reaching $804. It eventually closed at the $817.05 seller. It is its fourth highest value in history, with an increase of $9.35 in relation to yesterday’s price.
How does it affect Chilean weight? On Wall Street, profits hover around 2%, while the Santiago Stock Exchange climbed 1.64%. Copper futures, on the other hand, are up 0.10%, although still below US$2.60 per pound.
Diario Financiero warns that “in Latin America, the trend is clearer: all the largest currencies in the region fall, although none as strong as the Chilean peso”.
Pulse, meanwhile, consulted experts, who do not agree with the reasons for this sharp rise, which leaves the exchange rate very close once again to its historical brands.
Among the most repeated causes are the uncertainty generated by the coronavirus, the one that confirmed 2 cases in the country, the social outburst in the country and the renewed expectations of rate reductions in Chile, following the Fed’s move.
A local square operator plotted the scenario in these terms: “With the muddy one there is very low the likelihood of seeing it under $800.”
“That also (influences), as a carry trade effect, especially with the news of Goldman Sachs. If a giant says they expect 75 base points of cut in Chile, how will the market position itself?” commented César Valencia, from Alpari, to Pulso.
“There have already been cuts in Canada, Australia, Malaysia, among others, so we can already see that a new cycle of a more accommodative monetary policy has begun, seeking to minimise the risks that coronavirus has taken to the economy,” an analyst XTB Latam Markets.
This surprise interest rate cut, the one made by the General Reserve, puts pressure on the Central Bank, according to experts, as there is now no coincidence about the next steps of the interest rate.
As for the projections, XTB Latam’s Market Analyst Sebastian Espinosa told Emol that “the exchange rate, as we have mentioned, should remain between $807-$808 and $820, though closer to $815 – $820. Breaking the $820 upwards, we’re likely to see attempts at attacks on all-time highs.”