Chile: Dollar Surges to $930 Amid European Market Turbulence

The dollar index rose 0.4% as tensions continue to mount over the potential rise of right-wing candidate Marine Le Pen in the upcoming general elections in France.

As the week draws to a close, the political tension in Europe is spreading globally, affecting emerging market currencies, including the Chilean peso, which is among the casualties of a massive sell-off.

The dollar price increased by $11.15 to $929.64 at 10:35 AM in Chile, later moderating to $927.19, a rise of $9.09 by midday on Bloomberg screens.

This trend aligns with the global dollar movement. The Dollar Index rose 0.42% to 105.64 points due to strong sales of European currencies, driven by rising tensions over Marine Le Pen’s potential victory in the French elections.

Meanwhile, Comex copper dropped 0.46% to $4.46 per pound.

Virtually all emerging market currencies are depreciating. Amid fiscal uncertainty in a major eurozone economy, there is a “flight to quality,” a shift of capital to safer assets, where emerging markets typically suffer.

Investors are moving out of equities and into higher-quality assets like German or U.S. bonds. This movement out of Europe, where political issues are prevalent, strengthens the global dollar, causing other currencies to depreciate.

Thus, while the French stock market falls by 3%, fixed income experiences a surge in demand. Sovereign bond yields are dropping in the U.S., with particularly sharp declines in Germany. The yield on a bond moves inversely to its price.

Adding to the turbulence, U.S. consumer confidence unexpectedly plunged to a seven-month low, according to the latest University of Michigan survey.