USD/CLP to push higher towards 875/900 – ING
17.11.2021, 14:54

USD/CLP to push higher towards 875/900 – ING

Chile’s peso has suffered. Despite likely aggressive hikes from the local central bank, economists at ING expect USD/CLP to press 875/900 as copper turns lower.

Peso needs some assistance

“Front and centre now is the first round of the presidential election to be held on 21 November. Most recent opinion polls point to the left-wing threat of Gabriel Boric fading and conservative candidate Jose Kast likely to win in a run-off on 19 December. That could provide a little more stability to the peso, as could any sign that Congress is blocking any further release of private pensions.”

“The CBC has been aggressive in its tightening and is talking about bringing the policy rate to neutral more quickly than expected. Where is neutral? The policy rate was 3.00% pre-pandemic, but we suspect that neutral now could be closer to the 5% area seen a decade ago.”

“Our commodities team warns that copper could average closer to the $8,650/MT area through 2022 – clearly a negative for the peso.”

“At this stage, we are concerned for the peso’s prospects next year and a stronger dollar/higher US rate environment could see USD/CLP pressing 850/900.”

 

 

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