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Chile's Surging Peso And Record IPSA Put The Country Back On Investors' Maps
(MENAFN- The Rio Times) Key Points
USD/CLP is back near its March lows as copper soars and the global dollar weakens.
Santiago's IPSA index keeps printing record highs, powered by strong earnings and renewed foreign inflows.
Markets are quietly positioning for a clearer, more rules-based policy mix after the December 14 runoff.
The Chilean peso has turned into one of the cleanest ways to bet on a weaker dollar and strong commodities. By early Thursday morning, USD/CLP was trading just under 920 after closing around 919.5, its lowest level since March.
The move mirrors a slide in the Dollar Index toward the high-90s after soft US labour and services data reinforced expectations of another Federal Reserve rate cut.
At the same time, copper futures have climbed above 11,400 dollars a tonne, supported by supply problems in several large mines and very low inventories. For Chile, that is a textbook positive terms-of-trade shock.
With the central bank's policy rate at 4.75% and inflation around 3.4%, the peso still offers attractive real carry, especially compared with peers where governments lean harder on central banks.
Technical signals back the story. On four-hour and daily charts, USD/CLP trades below its main moving averages and under the Ichimoku cloud.
MACD is negative on both timeframes, while RSI hovers in the mid-30s. The trend is clearly peso-positive, but the oversold readings warn that sharp short-covering bounces toward 925–930 are possible if the dollar stabilises.
Equities are the other obvious expression of the same trade. The S&P IPSA closed around 10,176 points on Wednesday, another record close and more than 50 percent higher this year in pesos, over 60 percent in dollars.
Among the top winners on the day were CAP, CMPC, Engie Energía Chile, Latam Airlines and Falabella. On the losing side, SQM-B, Entel, Andina-B, Carozzi and Cencosud lagged the index.
Behind the rally lies more than global liquidity. Corporate earnings have surprised on the upside, pension and retail money is returning, and foreign funds are rebuilding positions through Chile ETFs.
Many investors clearly expect the post-runoff landscape to tilt back toward clearer, market-friendly rules after years of constitutional and ideological noise.
If copper and the Fed cooperate, Chile once again looks like Latin America's quality market rather than its problem child.
USD/CLP is back near its March lows as copper soars and the global dollar weakens.
Santiago's IPSA index keeps printing record highs, powered by strong earnings and renewed foreign inflows.
Markets are quietly positioning for a clearer, more rules-based policy mix after the December 14 runoff.
The Chilean peso has turned into one of the cleanest ways to bet on a weaker dollar and strong commodities. By early Thursday morning, USD/CLP was trading just under 920 after closing around 919.5, its lowest level since March.
The move mirrors a slide in the Dollar Index toward the high-90s after soft US labour and services data reinforced expectations of another Federal Reserve rate cut.
At the same time, copper futures have climbed above 11,400 dollars a tonne, supported by supply problems in several large mines and very low inventories. For Chile, that is a textbook positive terms-of-trade shock.
With the central bank's policy rate at 4.75% and inflation around 3.4%, the peso still offers attractive real carry, especially compared with peers where governments lean harder on central banks.
Technical signals back the story. On four-hour and daily charts, USD/CLP trades below its main moving averages and under the Ichimoku cloud.
MACD is negative on both timeframes, while RSI hovers in the mid-30s. The trend is clearly peso-positive, but the oversold readings warn that sharp short-covering bounces toward 925–930 are possible if the dollar stabilises.
Equities are the other obvious expression of the same trade. The S&P IPSA closed around 10,176 points on Wednesday, another record close and more than 50 percent higher this year in pesos, over 60 percent in dollars.
Among the top winners on the day were CAP, CMPC, Engie Energía Chile, Latam Airlines and Falabella. On the losing side, SQM-B, Entel, Andina-B, Carozzi and Cencosud lagged the index.
Behind the rally lies more than global liquidity. Corporate earnings have surprised on the upside, pension and retail money is returning, and foreign funds are rebuilding positions through Chile ETFs.
Many investors clearly expect the post-runoff landscape to tilt back toward clearer, market-friendly rules after years of constitutional and ideological noise.
If copper and the Fed cooperate, Chile once again looks like Latin America's quality market rather than its problem child.
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