Bloomberg — The Chilean peso (CLP:CUR) and the Peruvian sol (PEN:CUR) lead gains in global currency markets on Tuesday and so far this year. Investors continue to reduce bearish positions carried out during the elections in Chile, in which the former left-wing student leader Gabriel Boric won.
The Chilean currency appreciated as much as 1.1% before reducing the ground gained to 0.4%. The lack of a specific news item that triggered the move leads traders to wonder if the swing is related to a big move by some institutional investor.
The relatively lower liquidity of the Chilean peso compared to other pairs of emerging markets such as the Mexican peso, the Brazilian real and the South African rand, leaves the Andean currency more prone to a sharp swing in case of high flows.
The Chilean currency retested its 100-day moving average at 816 per dollar, which remains the most immediate technical level, attracting demand for dollars several times in recent sessions. The volatility of the peso remains the highest in the region as investors reverse the depreciation seen during the presidential campaign.
The main potential local catalyst in Chile continues to be the announcement of the future cabinet of President-elect Boric, who told reporters Monday that he plans to announce the names later this week.
SEE MORE: Boric appoints a human rights expert lawyer as his chief of staff
The Chamber curve rises between 2 and 4 basis points, in line with the movement observed in other emerging markets, which are following the strong movements of US Treasury bond yields.
The Peruvian sol also expands its gains, to rise 0.4% this day. Both Andean currencies outperform despite a 0.2% drop in copper in London.
The sol is also the second best performing currency in the world in 2022, as operators are reducing negative bets linked to the election of the Castillo Government last year. The sol, which recently broke through its 200-day moving average and has gained some appreciation momentum, is targeting 3.80 per dollar as its next support.
The Colombian peso (COP:CUR), for its part, fell 0.3%, in line with the negative performance observed in most emerging market currencies amid losses in the stock markets of developed countries. Not even the positive sentiment in the oil market has been able to significantly boost the currency.
Crude rose 1.3% in London, reaching the highest level in seven years before the heating of the physical markets in the regions of greater consumption of the world. Goldman Sachs Group Inc. said oil prices are headed for $100 a barrel. The continued rise in crude oil prices is keeping global inflation under pressure.
(Some of the information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly.).
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