Chile: Dollar Closes Closer to $900 with Biggest Drop in Two Months

The dollar index fell 0.52% to 104.12 points, and Comex copper rose 1.38% to $4.67 per pound, propelling the Chilean Peso.

Ignacio Teson•Tuesday, June 4, 2024•1 min read

The exchange rate plunged this Monday in its first session of June, as both internal and external conditions favored the Chilean peso: recent manufacturing data in the United States was below expectations, and slightly above expectations in China, while in Chile, the latest Imacec figures reaffirmed support for the local currency.

After falling more than $40 in May, the dollar today dropped $14.77 to $904.7 at the close of the local exchange market, marking its largest daily drop since April 3, according to the selling rates compiled by Bloomberg. The Chilean peso was the best-performing emerging market currency of the day.

The dollar index fell 0.52% to 104.12 points, and Comex copper rose 1.38% to $4.67 per pound, while U.S. rates eased by up to 10 basis points (bps) and Brent crude oil declined 3.7% to its lowest level since February.

With the rise in copper prices, the outlook for the Chilean peso has improved significantly. Additionally, there is an expectation that Chile’s monetary policy will become less aggressive in its movements, and both the Chinese and Chilean economies are showing marginal improvements.

These are the latest economic milestones: The S&P/Caixin manufacturing PMI in China reached its highest level since mid-2022, boosting copper prices. Later, the ISM index for U.S. factories deepened its decline below 50 points (contraction zone), putting downward pressure on rates and the dollar globally.

Back in Chile, although the April Imacec brought mixed surprises, it generally confirmed the recovery path of the Chilean economy. At the same time, a more moderate rate cut of only 25 bps is expected in the next Central Bank meeting.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.