The announcement of intervention of the dollar market in Chile by the Central Bank was enough for the Chilean peso to stop its violent downward trend and to strengthen. The injection of US$25 billion, through sales of spot dollars and other foreign exchange hedging instruments, will begin on Monday, but investors have already reacted.
In addition, the dollar is weakening internationally and the value of copper fell on the London Metal Exchange, but its future values show gains.
In the operations prior to the beginning of the day, the dollar came to trade below $1,000 and following its opening the downward trend was maintained.
The dollar fell $72.50 from yesterday’s close and is trading at a value of $978.50. Given this, the US currency in Chile recorded its largest daily drop in history.
During today, the greenback was trading at a maximum of $1,009.38 and a minimum of $956.35.
However, in the balance of the five days, the dollar rose $4.62 and registers six consecutive weeks on the rise. In a week in which only five currencies of the 23 currencies of emerging countries strengthened once morest the US currency.
Meanwhile, the 12-month greenback earns $220.20, adds $126 so far this year and rises $58.20 in the month.
The Chilean peso strengthens despite the fact that the price of copper fell once more on the London Metal Exchange following the bad economic data provided by China, the main buyer of the reddish metal and Chile’s trading partner. The value of the metal lost 2.99% and closed at US$3.1751, its lowest level since November 2020. In addition, the country’s main export recorded a six-day losing streak, where it accumulated a loss of 10.1% and shows the largest weekly loss in 20 months on British soil, according to Bloomberg.
However, in its three-month trading, copper reversed its initial decline and is now up 1.01% at US$3.24 a pound. According to Archyde.com, the metal recovered following data showed that US consumers moderated their inflation expectations in July along with a sharp drop in gasoline prices.
Meanwhile, the dollar at the international level weakens compared to yesterday’s session, where it recorded a rise of 0.59%. The dollar index falls 0.50%.
From Archyde.com they explain this movement thanks to investors evaluating to what extent the Federal Reserve is likely to raise interest rates when it meets later this month, and by taking profits following a strong rise that led the greenback to a maximum of two decades in the previous wheel.
“It is in a technical low that might not last long if the 100 basis point rise in interest rates by the United States Federal Reserve is carried out, this would once more generate upward pressure on the Chilean peso,” he comments. Libertex analyst Gerald León.
Given all this scenario and during today, the Chilean peso is the currency that appreciates the most in the world once morest the dollar, according to Bloomberg.
“We hope that the intervention of the Central Bank will have a short-lived effect on the price of the dollar and it is likely that what will command the price of next week will once more be the price of copper and the dollar at the international level, so further falls in copper might lead the dollar to approach $1,000 once more”, says the senior market analyst at XTB Latam, Sebastián Espinosa.