Chile: Dollar rises to $950 awaiting Fed’s signals.

The local parity rose by $5.98 to $949.07 - session highs, after completing a $20 weekly drop last Friday.

Gabriel Micillo•Monday, March 18, 2024•2 min read

While it is widely expected that the Fed will keep the rate unchanged this Wednesday, there is a high interest in knowing their famous dot plot.

The dollar rebounded towards the $950 level this Monday, as investors worldwide are eagerly awaiting the Federal Reserve meeting culminating this Wednesday with a range of official projections. External factors took center stage after Chile released GDP data better than expected and a more negative deficit than anticipated in the current account of the balance of payments.

The local parity rose by $5.98 to $949.07 – session highs, after completing a $20 weekly drop last Friday. Today, the currency gained ground against nearly all emerging currencies, and the dollar index, comparing it with six developed peers, grew by 0.12%. Meanwhile, Comex copper, main export of Chile, rose by 0.23% to US$4.13 per pound.

In general, the dollar globally is appreciating ahead of the Fed meeting, where even expectations of a rate cut in the June meeting have tended to fade in light of the latest U.S. data, ultimately appreciating the dollar.

While it is almost 100% certain that the Fed will maintain the rate, there is anticipation for its famous dot plot, which gathers the projections of Fed members for the economy and rate levels. Interest rates have been rising in major economies, anticipating caution in rate cut decisions.

At the start of the session, the Central Bank released its National Accounts report, indicating that GDP in the last quarter of 2023 rose by 0.4% year-on-year – above forecasts – but the current account deficit was below expectations, according to esitmations.

In the end, the international scenario is prevailing more, along with the fact that probably quite a few local agents see a good entry point for long positions in dollars after last week’s sharp correction. Estimations point out that the current account deficit may have had some depreciative impact today, especially in the eyes of non-resident investors as it remains elevated for the local economy.

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ABOUT THE AUTHOR See More

Gabriel Micillo

Gabriel is a certified public accountant graduated from UNNE (National University of the Northeast, Argentina) and a software developer, currently pursuing a Master's degree in Finance and Economics. With nearly 8 years of experience working for accounting firms and brokerage firms. Concurrently, he has produced economic and financial reports on the current state of regional economies for the clients of the establishments where he has worked. Additionally, he assisted colleagues like Ignacio Teson in the drafting and editing of articles on similar topics in English language.