The dollar in Chile woke up from its nap and soared $22: the…

The dollar in Chile woke up from its nap and soared $22: the…
The dollar in Chile woke up from its nap and soared $22: the…

The dollar in Chile advanced $21.94 on the day of Wednesday, May 22, 2024, to close the wheel at $910.07. This jump implies a change in trend with respect to the decline that has been observed in recent weeks and is due, in part, to the bad day that copper had, which was the main catalyst for the Chilean peso.

see more: Chile plans to place international debt in pesos amid a bond buyback offer

It also played against the Chilean currency that was comments from officials of the United States Federal Reserve (Fed)which seem to indicate a more restrictive path on the part of the North American central bank.

The reasons behind the rise

“This week, “The comments of the governors of the United States Federal Reserve have influenced the rise of the dollar”as stated Matias Molina, XTB Latam market strategist. And he added: “Although good results from the Consumer Price Index (CPI) are still required to consider a decrease in the financing rate, uncertainty persists”.

It is worth remembering that the Fed’s stance directly influences emerging currencies, such as the Chilean peso.

On the other hand, the executive indicated that recent trade restrictions between the United States and China have generated uncertainty in the markets, boosting the dollar as a safe haven asset.

see more: Copper reaches historical highs and they claim that the dollar could fall to $850 in Chile

“Likewise, the rejection of the purchase proposals by BHP from Anglo American, both copper mining companies, has weakened demand for the red metal. The uncertainty about the possible merger affects the supply and, therefore, the price of copper,” Matías Molina also mentioned.

Finally, the XTB Latam executive indicated that if the restrictions continue and the Federal Reserve continues to postpone a decrease in monetary policy, “we could see exchange rate levels close to $920.”

Chile plans to place debt in pesos

Chile plans to go to international debt markets for the second time this year as it offers to buy back part of its global bonds in pesos. The South American country is going to buy back peso-denominated notes due in 2025, 2026, 2028 and 2033, according to a statement on Wednesday. The tender depends on the sale of similar securities, the statement said.

See more: CAE: the Government’s response to student debt that reaches US$11.9 billion The new bond purchase operation occurs after the global rise in the peso this month. The currency, which had been hit by the central bank’s aggressive interest rate cut cycle, has rallied 6.2% against the greenback in May thanks to rising copper prices. That’s more than any of its more than 140 peers tracked by Bloomberg. Even so, the currency fell on Wednesday as the local market reopened after a holiday and the red metal weakened.

Finance Minister Mario Marcel, central bank governor Rosana Costa and other officials will meet with investors in New York and Toronto next week as part of Chile’s annual day. Local currency-denominated bonds aimed at global investors have become popular among Latin American issuers, from Uruguay and Peru to Carlos Slim’s América Móvil. Chile last tapped global bond markets in January, when it sold $1.7 billion in notes due 2029.

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