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Thursday, August 18, 2022

Chile peso rises due to weakening of copper and dollar

SANTIAGO ( Associated Press) – A rise in the price of copper, a global weakness in the dollar and an exchange and liquidity intervention by the Central Bank reversed the depreciation of the Chilean peso, which has lost about 20% of its value in the year, analysts agree.

The dollar reached an average value of 940.59 pesos, a decline from 1045 pesos on Friday, a drop of 105 pesos in two days.

The dollar’s fall was fueled by a rise in the price of Chile’s biggest export copper, which rose nearly 4.5% on Monday – the biggest daily increase since October 2021 – including an international weakness in the currency, factors that pushed the Chilean peso. Appreciate.

“When the price of copper falls … in the foreign exchange market, the supply of dollars decreases, and if the supply decreases, (pesos) depreciates … because we distribute more pesos per dollar,” The economist explained. The Associated Press. Victor Salas, from the University of Santiago. “Conversely, when copper rises, more dollars come in, which reduces its value in the foreign exchange market.”

Ricardo Bustamante, Head of Capitaria Investment Studies, pointed out that “the high supply of North American currency in our country supports the weakening of its value.”

In addition, on Monday the Central Bank began the implementation of a program of exchange intervention and preventive liquidity provision of US currency up to $25,000 million that seeks to adjust to the “uncertain and changing” internal and external to Chilean economy. terms, as per that issuing entity.

Internal factors include uncertainty about the referendum on 4 September, when Chileans will decide whether to accept a draft constitution drafted by a majority of left-wing conservatives, which will replace the fundamental law bequeathed by the military dictatorship (1973-). tries to. 1990). ), which will remain in force on winning the “Reject” option proposed text.

“This uncertainty means a very strong issue in the operations of economic agents. It means people think there is risk, there is uncertainty and they get scared, so they sell their assets and take refuge in dollars.. .

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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