Jan 08, 2025 (MENAFN via COMTEX) --
(MENAFN - Investor Ideas) Investorideas, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.
"The Chilean peso has shown improvement in recent sessions, trading with gains against the US dollar and recovering from multi-year lows. This appreciation, marking two consecutive days of gains with a 0.8% increase for the CLP on Tuesday, occurs in the context of global volatility driven by President Trump's trade policy statements and the release of key economic data.
One of the factors that initially fueled this positive trend was speculation about a possible tariff easing by the Trump administration, which temporarily weakened the dollar. However, the quick denial of this information by the president himself rekindled uncertainty in the markets, generating volatility and testing the peso's strength. US trade policy remains a crucial factor for emerging market currencies, and the Chilean peso is no exception.
Despite external turbulence, the Chilean economy shows positive fundamentals that have supported the peso's appreciation. Chile's trade balance exceeded expectations, posting a surplus of $2.39 billion, the highest figure in a year. This positive result is largely due to the dynamism of the export sector, which reached $9.42 billion, driven mainly by copper shipments. Exports from the mining sector grew by 8.9%, with copper rising by 12.8%, silver by an impressive 103.5%, and gold by 45.6%. The agriculture, forestry, and fisheries sector also contributed significantly, increasing by 103%, with fruit exports rising by 105%.
Imports, in turn, grew by 14.6%, reaching $7.03 billion, led by intermediate, consumer, and capital goods, reflecting a strong domestic economic activity. This trade surplus, the largest in nearly a year, highlights the resilience of the Chilean economy and relatively eases concerns about sluggish economic growth.
However, certain risks remain that could dampen optimism. The release of inflation figures may influence exchange market behavior. If inflation continues to decline, the Central Bank of Chile may be encouraged to proceed with interest rate cuts, potentially reducing the peso's attractiveness to investors. Inflation trends will be crucial in determining the peso's direction in the short term.
In the near future, attention is also focused on the release of key economic data in the US and the FOMC minutes. Strong economic data in the US could strengthen a more aggressive stance by the Federal Reserve in 2025, exerting pressure on the Chilean peso.
Conversely, weak data could weaken the dollar, creating a tailwind for the Chilean currency.
Ultimately, the Chilean peso stands at a crossroads, navigating between volatile external factors and strong internal fundamentals. The peso's performance in the coming weeks will largely depend on the evolution of these factors."
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