The dollar had its biggest jump in three months due to the unexpected rise of a inflation data that the Federal Reserve watches closely to calibrate its monetary policyat the end of a week where the greenback was constantly pushed up by rate expectations and geopolitical tensions.
According to Bloomberg, the price of the dollar increased $18.33 to $826.25 at the close of the exchange session in Chile. It was its highest daily rise since November 18 and was at its highest since January 10.reuniting with its 50-day moving average.
The exchange rate advanced $36.16 for the week as a whole, registering its largest weekly increase also since Friday, November 18. During this time, The Chilean peso was the currency that depreciated the most in the world.
Parity rose repeatedly despite the fact that the Ministry of Finance sold US$ 100 million yesterday for the third consecutive dayfalling just $84 million short of meeting its planned $2 billion goal for the month of February.
According to data from the Central Bank, The non-resident agents of the exchange market reported this Wednesday a net position of US$ 2,573 million against the Chilean peso, the largest registered so far this year.
“Although the ongoing adjustment of the current account would continue to act as a factor favorable to the local currency, the evolution of the latter would continue to be influenced to a large extent by the external scenario. We believe that there is little room for the peso to continue appreciating further” , said the economists from Banchile Inversiones, Carolina Grünwald and Agustín García, through a note.
Figure of the day
At the time of closing, he dollar index it grew 0.62% to 105.25 points and the two-year Treasury bond rose 11.4 basis points (bp) to 4.81% -new maximums since July 2007-. For his part, Comex copper fell 2.49% to US$3.96 a poundmissing the $4 a pound mark it last earned on Jan. 9.
This morning it was revealed that The US core personal consumption deflator index returned an annual change of 4.7% in January, unexpectedly accelerating from 4.4% the previous month, when a drop to 4.3% was expected. The indicator shows the price variation in GDP excluding volatile components.
“The acceleration of the Fed’s preferred inflation data is important news. This will ensure that the mantra of continued rate hikes sticks.with movements of 25bp in March, May and June fully discounted by the markets,” ING chief international economist James Knightley wrote in a note.
While the number beat even the top estimate of analysts surveyed by Bloomberg, it was in line with the second estimate of GDP for the fourth quarter of 2022 in the USwhere the core deflator index was revised upwards.
cold week
The exchange rate rose this week mainly due to the market’s efforts to discount what would be the Fed’s final rate path, an expectation that in recent weeks has become prudent to the point of matching the aggressive discourse of its officials.
Published on Wednesday, the minutes of the last meeting of the Federal Open Market Committee they had already noted a general determination among Fed members to continue with successive rate hikes to return inflation to the 2% annual target.
“The post-pandemic economy still shows significant imbalances, which make monetary policy more difficult to calibrate. For example, purchasing managers’ expectations were published this week, reaffirming that the good dynamism in the service sectorwhile manufacturing would be contracting,” said Bci Estudios in its weekly report.
Geopolitics has also contributed to supporting the international demand for dollars. In particular, the alarm generated in Washington by the diplomatic rapprochement between China and Russiain a context where this Friday marks one year of the Russian invasion in Ukraine.