Tuesday, August 9, 2022

How does a new economic contraction in the US affect the exchange rate in Chile?

Santiago – Rise in copper prices, Chile’s biggest export, is appreciating the peso (CLP:CUR), The exchange rate this Thursday closed without any change at $910 per dollar compared to yesterday.

Thus, the Chilean peso is the third best performing currency in the world this week, having gained 3.11% during the past four days and extending its recovery over the past four days. Central Bank announces foreign exchange intervention on July 14, The recovery of copper, which was quoted at US$7,712 per tonne (a daily variation of 2.12%) this Thursday, is influencing the exchange rate.

Today in this context it was learned that the US economy shrank for the second quarter in a row. On this occasion the decline reached 0.9% year-on-year, leaving the currency weakening globally.

Investors are keeping their eyes on what will happen to the market, especially if the US Federal Reserve (FED) implements aggressive interest rate hikes in its next meetings in view of the contraction of the economy.

Read Also:  In Amy Coney Barrett's Ideal World, I Would Be Dead

Some economists believe the United States has entered a technological recession., Benjamin Castillo, senior market strategist at XTB LATAM, told Bloomberg Line that, among the various scenarios, one is that it could be temporary, and growth could resume in 2023.Recession not expected as it has been in other decadesWhere there is a huge shortage of jobs and other economic indicators… the market is not anticipating it, but it will probably be a bad second semester.

For Rodrigo Castillo, general director of BFX, the market could react negatively to the contraction in the US economy for the second consecutive quarter, making investors more inclined towards fixed income.

influence of many factors

On a regular basis, given the bearish fears, the dollar can be expected to strengthen, says XTB LATAM analyst, A manifestation of this, however, will depend on other variables, including local uncertainty due to component processes and movements in the copper market, in the exchange rate in Chile. Although the price of the red metal has been rising in recent days after China, the world’s biggest copper consumer, announced new measures to boost its economy; It is still far from recovering the values ​​it lost this year.

Read Also:  Former Massachusetts State Representative David Nangal sentenced to 15 months in prison

According to Freeport-McMoran Inc., the prices are so low that they will not support the development of new mining operations.

On a political level, the prospect of a new constitution keeps the markets more and more attentive. YesAccording to recent polls, the “reject” option would win in the referendum on 4 September.However a survey by the Cadem company indicated that the gap had narrowed with “approvals” in the past week.

President Gabriel Boric said that, if the Magna Carta proposal is rejected, a new constituent process should be promoted. From the opposition he believed the government would interfere in the election campaign to support a new text, a complaint that escalated The controller, this week, launched an investigation to find out whether there was an improper use of public funds By the Ministry of the General Secretariat of Government (Seggobe), headed by former deputy Camila Vallejo.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here