Chilean Peso And Santiago Stocks Pause As Fed And Runoff Loom

(MENAFN- The Rio Times) Key Points

• Peso hovers near CLP 925 per dollar as a firmer global dollar and softer copper offset Chile's solid trade surplus and inflation progress.
  
• IPSA slips 0.4% after nine straight record closes, with foreigners still pouring money into Chile via the ECH ETF and betting on a market-friendly election outcome.
  
• Technicals show a short-term correction in both FX and equities inside longer-term trends that still favour a stronger peso and elevated Chilean stocks if politics stay orthodox.
  

The Chilean market opened Wednesday with a cooler tone after weeks of euphoria. In Santiago's interbank market the dollar trades around CLP 925–926, almost exactly where it closed on Tuesday, when the peso lost about 0.4%.

Traders blamed a modest rebound in the global dollar, weaker copper and pre-Fed caution rather than any new local shock.

The dollar index is sitting near 99, up slightly after stronger-than-expected US labour data pushed Treasury yields higher ahead of the Federal Reserve's rate decision. Dealers talk of a possible“hawkish cut”: another trim to US rates, but packaged with tough language on inflation.



That combination tends to give the greenback a short-term bid, even as the broader 2025 trend has been one of dollar weakness that normally favours disciplined emerging markets like Chile.

At home, the macro picture still argues for a firmer peso over time. November's trade surplus jumped to roughly US$1.9 billion, taking the year-to-date surplus near US$19 billion.

Inflation has eased back towards the 3% target and the policy rate stands at 4.75%, with investors expecting a cautious 25-basis-point cut next week rather than the kind of aggressive easing programmes that scare markets.



Much of the optimism rests on polls pointing to a conservative victory in Sunday's runoff, which investors see as a safeguard against heavier-handed, interventionist experiments.

Equities told the same“pause, not panic” story. The S&P IPSA slipped 0.4% to about 10,180 points after nine consecutive record closes, but remains up more than 50% this year.

Offshore, the iShares MSCI Chile ETF (ECH) trades near US$38 with year-to-date gains above 55% and roughly US$740 million of net inflows over three months, a clear sign foreign money is still voting for Chile.

Under the surface, leadership rotated. Among local shares, ABC jumped about 13.8%, followed by AAISA, SQM-B, NTG Gas and Concha y Toro.

On the downside, Enel Chile fell roughly 3.2%, with CMPC, Ripley, PlanVital and Besalco all losing between 2% and 4.5% as investors locked in profits after a stellar autumn rally.

Technically, four-hour USD/CLP charts show the dollar rebounding from the 918–920 zone toward the middle of a 915–930 range, while daily charts still point to a gentle downtrend in the pair.

For the IPSA, weekly and daily indicators remain firmly overbought after the surge past 10,000 points, suggesting a consolidation phase rather than a reversal.

Unless the Fed unexpectedly slams the brakes or Chile's election delivers a surprise lurch toward heavier state control, markets still assume the peso and Santiago stocks are correcting within a broadly positive, reform-friendly story.

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