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Peso Under Significant Pressure At Open, USDCLP Rises 2.15%

CHILE
  • The aforementioned USD buying program placing USDCLP substantially higher at the open, back above 800 and touching a high of 806.50 in most recent trade. We note that key short-term resistance remains much higher at 837.15, the Mar 17 high.
  • Goldman Sachs made the following comments: “While the central bank can take some comfort that the non-mining output gap has continued to narrow and headline inflation has trended downwards, we believe core inflationary pressures remain persistent and the central bank will likely want to evaluate the impact of the announced program on the performance of the CLP before embarking on a cutting cycle.”
  • Scotiabank stated they knew that the BCCh would start this reserve accumulation program, but the timing surprises them, having expected it to start somewhat later in the middle of the monetary policy normalization process.
  • They detailed that they expect an effect of this accumulation of reserves of around 20 pesos on USDCLP, which will occur in the very short-term. “We must remember that the BCCh also began the process of closing the NDF a few weeks ago, so it clearly wants to restore normality in the FX market and, at the same time, return to more adequate levels of international reserves.”
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