The dollar in Chile registered a new day on the rise before a market that sees that the Federal Reserve of the United States will maintain its aggressive plan of rate hikes and despite the fact that the price of copper operates with a significant rise. In addition, the record current account deficit further weakened the Chilean peso.
At the close of operations, the dollar recorded a rise of $31.64 compared to yesterday’s close and traded at $930, scoring three consecutive days higher with a cumulative profit of $53.
The Chilean peso weakened despite the fact that the price of copper operates on the rise for the first time in a week, as hopes of strong demand in China offset fears regarding the pace of interest rate hikes and slowing economic growth, Archyde.com notes. Specifically, the three-month copper price registered a jump of 1.72% to a value of US$3.65 per pound.
In addition, the dollar in Chile scored its third highest daily rise in history, according to Bloomberg records.
“In today’s session we learned regarding Chile’s GDP, which came out below what the market expected, in addition to some economic data from the US. If we continue to see the dollar appreciate worldwide, and we continue with considerable uncertainty due to the plebiscite of the new constitution, we might continue to see increases in the exchange rate,” said José Tomás Riveros, senior analyst at Capitaria.
For his part, Guillermo Araya, manager of studies at Renta4, assured that “what really worried the market is that, in seasonally adjusted terms, economic activity did not show any variation compared to the previous quarter.”
However, the Chilean peso was not the only currency that experienced a bad day once morest the dollar. Of the group of 23 emerging market currencies, only the Russian ruble appreciated once morest the dollar on Thursday
Internationally, the market is focused on the likelihood that the US central bank will continue to hike rates aggressively to curb inflation.
“The Fed’s rhetoric has been very strong from pretty much everyone: We have to raise rates, we have to raise rates, rates are going to go up,” Joseph Trevisani, an analyst senior of FXStreet.com in New York.
The minutes also signaled what will be an important dimension of the Fed’s debate in the coming months: when to slow the pace of rate hikes.
“Except for the part regarding slowing down the pace of rate hikes, the rest of the minutes are very rosy,” Brown Brothers Harriman’s Win Thin said in a report reported by Archyde.com.
Along these lines, the dollar once morest a basket of the world’s main currencies deepens its rise following closing on Wednesday in positive territory. The dollar index rises 0.83% and is headed for its second consecutive day of gains.
Given this scenario during the day, the Chilean peso was among the currencies that depreciated the most once morest the dollar in the world, according to Bloomberg.
Chile’s current account deficit reached $6.6 billion in the second quarter, nearly 50% higher than the median expectations of four analysts surveyed by Bloomberg. The deficit now represents 8.5% of gross domestic product, its highest level since at least 2004. At the same time, growth has stalled, leaving the economy on the brink of recession amid heightened political uncertainty. around a new Constitution.
A weak GDP should make the market rethink the monetary cycle, Juan Prada, currency strategist at Barclays Capital Inc. in New York, told Bloomberg. At the same time, however, a “weak” checking account needs a weaker currency and higher rates to correct itself.
The peso’s decline is made even more notable by the fact that the central bank is in the midst of a $25 billion intervention program to prop up its value. In mid-July, the peso fell to $1,060 per dollar, before sales in the markets spot and of forwards to push it back below the $900 level once more.
The Central Bank sold US$100 million in forwards at an average exchange rate of $920.20 per dollar first thing in the morning.