Free Trial

LarrainVial Expect CLP to Weaken to 800/USD Within 9 Months

CHILE

A temporary dovish shift from the central bank, possible tightening from the Fed and chance of falling copper prices are all factors contributing to an assessment by LarrainVial economists in a report.

  • If correct in their exchange rate prediction, the central bank would consider suspending its reserve replenishing and expansion program and stop buying dollars (currently at $40million per day).
  • Chilean institutions will face uncertainty surrounding the new constitution and possible changes to economic model.
  • "We think that institutional uncertainty will remain a fixture in the local political landscape, although the recently held primaries have somewhat allayed the market's worst fears".
  • BCCh has "plenty of reasons" to keep raising borrowing costs. They believe the bank will hike the key rate by 25bps at August meeting continuing to at least 4% by end of 2022.
  • Their outlook assumes an extension of fiscal stimulus until December, with the aim of avoiding a potential fourth pension fund withdrawal.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.