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Stronger Peso And Record Stocks Reward Chile's Market-Friendly Political Turn
(MENAFN- The Rio Times) Key Points
Chile's peso and equities are rising together as investors price in a more predictable, market-oriented policy mix after the first-round election.
A softer dollar index and record copper prices are amplifying Chile's structural strengths and making the peso one of Latin America's standout performers.
The IPSA sits near all-time highs, but stretched technicals and crowded positioning leave little margin for policy or external shocks.
The Chilean peso and Santiago's stock market are moving in lockstep. In early Friday trade, the dollar buys about 917 pesos, its weakest level in months after sliding from the mid-940s through November, while the S&P IPSA hovers just above 10,100 points, near record territory.
Behind the FX move is a mix of domestic and global forces. At home, inflation has been steered back into the mid-3% range and November's 0.3% CPI print keeps real rates positive with the policy rate around 4.75%.
Externally, copper near $11,500 a ton and a dollar index near 99, close to a five-week low as markets bet on imminent Fed cuts, are boosting Chile's terms of trade and demand for peso assets.
Politics are reinforcing the trend. The first-round result that put conservative José Antonio Kast into the 14 December runoff and strengthened the right in Congress has been read as a turn away from radical economic experiments.
Credit agencies and emerging-market strategists stress that Chile's institutions still limit extremes, a combination that reassures global funds. Equities tell the same story. The IPSA closed Thursday at 10,179 points, just below its all-time high.
Top gainers included LATAM Airlines (+2.73%), Parque Arauco (+1.90%), Andina-B (+1.39%), CMPC (+1.36%) and AAISA (+1.28%), while Almendral (-4.35%), SQM-B (-3.82%), Oro Blanco (-3.46%), Ingevec (-2.70%) and Mallplaza (-2.02%) led losses as investors rotated within the benchmark.
Technically, USD/CLP is in a firm downtrend on daily charts, hugging its lower Bollinger band, while four-hour candles show oversold readings that argue for intermittent bounces.
The IPSA, by contrast, is overbought on daily and weekly indicators, riding the top of its range. For now, high copper, easier global dollar conditions and the prospect of a more predictable government are keeping Chile on investors' radar.
Chile's peso and equities are rising together as investors price in a more predictable, market-oriented policy mix after the first-round election.
A softer dollar index and record copper prices are amplifying Chile's structural strengths and making the peso one of Latin America's standout performers.
The IPSA sits near all-time highs, but stretched technicals and crowded positioning leave little margin for policy or external shocks.
The Chilean peso and Santiago's stock market are moving in lockstep. In early Friday trade, the dollar buys about 917 pesos, its weakest level in months after sliding from the mid-940s through November, while the S&P IPSA hovers just above 10,100 points, near record territory.
Behind the FX move is a mix of domestic and global forces. At home, inflation has been steered back into the mid-3% range and November's 0.3% CPI print keeps real rates positive with the policy rate around 4.75%.
Externally, copper near $11,500 a ton and a dollar index near 99, close to a five-week low as markets bet on imminent Fed cuts, are boosting Chile's terms of trade and demand for peso assets.
Politics are reinforcing the trend. The first-round result that put conservative José Antonio Kast into the 14 December runoff and strengthened the right in Congress has been read as a turn away from radical economic experiments.
Credit agencies and emerging-market strategists stress that Chile's institutions still limit extremes, a combination that reassures global funds. Equities tell the same story. The IPSA closed Thursday at 10,179 points, just below its all-time high.
Top gainers included LATAM Airlines (+2.73%), Parque Arauco (+1.90%), Andina-B (+1.39%), CMPC (+1.36%) and AAISA (+1.28%), while Almendral (-4.35%), SQM-B (-3.82%), Oro Blanco (-3.46%), Ingevec (-2.70%) and Mallplaza (-2.02%) led losses as investors rotated within the benchmark.
Technically, USD/CLP is in a firm downtrend on daily charts, hugging its lower Bollinger band, while four-hour candles show oversold readings that argue for intermittent bounces.
The IPSA, by contrast, is overbought on daily and weekly indicators, riding the top of its range. For now, high copper, easier global dollar conditions and the prospect of a more predictable government are keeping Chile on investors' radar.
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