Chile: USD moderates at the beginning of the afternoon after falling to $940.

The decline comes despite the dollar index rising by 0.5% and Treasury yields jumping up to 10 basis points.

On Thursday, the price of the dollar fell again amid ongoing assessments of the impact of interest rate differentials on the Chilean peso, with the local market moving against the appreciation seen in the international currency arena.

The local parity dropped by $3.84 to $942.23 at the start of the afternoon in Chile, according to quotes, pointing to new six-week lows and reaching a new low of $940 shortly after. The Chilean peso was almost the only emerging currency strengthening in the session.

The decline in the exchange rate may be responding to the prolonged effect of Chile’s February CPI, which was stronger than expected, leading to “the Central Bank needing to be much less aggressive in lowering rates. In addition, we have seen that foreigners have significantly moderated their position against the Chilean peso,” said Rodrigo Castillo, CEO of BeFX, to DF.

Just on Friday, non-residents reduced their net bet against the national currency in the derivatives market by more than US$800 million. XTB Latam market analyst Ignacio Mieres also agreed that internal monetary aspects are pushing down the exchange rate.

With greater inflationary pressures and economic activity in Chile, the scenario changes. In the market, it is believed that perhaps the Central Bank’s easing will moderate and we will see slower rate cuts, which favors the Chilean peso due to the change in interest rate differentials with the exterior.

Things were different in the world. The dollar index rose by 0.53% and US Treasury yields jumped by up to 10 basis points (bp), as Producer Price Index (PPI) and initial jobless claims turned out to be stronger than expected in the world’s largest economy.

Meanwhile, Comex copper futures contracts fell by 0.64% to $4.03 per pound, losing their highs since July 2023 reached at the close of the previous session, in view of capacity reductions agreed upon by Chinese smelters. This caused the exchange rate to record a drop of $13.87 yesterday.