Chile: The dollar falls again and hovers around $920 before noon after copper surpasses $4.7 per pound.

The exchange rate retreats despite the University of Michigan consumer confidence survey bringing negative results in its preliminary May reading.

On Friday, the dollar was declining thanks to the copper recovery due to news from China, despite the increase in US consumer inflation expectations tending to strengthen the currency globally.

The local price fell by $4.74 to $921 before noon, according to quotes. Copper, Chile’s main export, rose 1.1% to $4.64 per pound, which still represents an adjustment from the intraday high of $4.75 reached earlier in the morning.

The drop is attributed to the effect of China’s trade balance. Imports and exports exceeded expectations, and overall economic data indicate that China is emerging from the more negative scenario it faced in 2023, which bodes well for this year.

The latest inflation data in Chile has also weighed on the exchange rate. With inflation returning to the upper part of the Central Bank’s target range, we could expect less aggressiveness in rate cuts, appreciating the peso and causing a decline in the greenback in our country.

Indeed, it’s how the mineral enables the Chilean peso to still register gains amid a somewhat more adverse international climate, as the dollar index rose 0.15% as financial conditions tighten in the US.

The University of Michigan consumer confidence survey brought unwelcome results in its preliminary May reading. Confidence indices dropped sharply and surprisingly, while the expectation of inflation over the next 12 months rose three tenths to an annual rate of 3.5%.