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CHILE: Deutsche Bank Expect Peso to Continue Outperforming Peers

CHILE
  • As we head into the second half of the year, Deutsche Bank are expecting the Chilean peso to continue outperforming regional peers.
  • DB cite a more cautious BCCh, high copper prices, a reversal in forward CLP positioning, Hacienda announcing the resumption of USD sales, improving current account dynamics and a benign political landscape are all favouring the Chilean peso, in a context of low international volatility. Hence, DB expect CLP to continue outperforming regional peers.
  • Deutsche also believe positioning has benefitted the peso given it was quite light on CLP during the first quarter of 2024. However, offshore short positions started to diminish in April, a trend that has been in line with the CLP strengthening.
  • They note the last two times positioning reached similar levels – in July 2023 and December 2023 – CLP stood around 800 and 860, respectively. With better economic prospects and a less-dovish BCCh, DB do not rule out positioning turning positive.
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  • As we head into the second half of the year, Deutsche Bank are expecting the Chilean peso to continue outperforming regional peers.
  • DB cite a more cautious BCCh, high copper prices, a reversal in forward CLP positioning, Hacienda announcing the resumption of USD sales, improving current account dynamics and a benign political landscape are all favouring the Chilean peso, in a context of low international volatility. Hence, DB expect CLP to continue outperforming regional peers.
  • Deutsche also believe positioning has benefitted the peso given it was quite light on CLP during the first quarter of 2024. However, offshore short positions started to diminish in April, a trend that has been in line with the CLP strengthening.
  • They note the last two times positioning reached similar levels – in July 2023 and December 2023 – CLP stood around 800 and 860, respectively. With better economic prospects and a less-dovish BCCh, DB do not rule out positioning turning positive.