The dollar initially fell to $880 this Tuesday after US CPI, recent operations of the Ministry of Finance and a disarmament of forwards. But the low levels attracted a wave of demand that ultimately brought it back to where it was, and even a little higher.
The dollar-peso parity fell $5.2 to $880.2 on Bloomberg screens, and from this session low the fall began to reverse. Thus, the dollar was quoted at $886.8 at the close, an increase of $1 compared to the day before.
The rebound was caused by the course of international prices. The vast majority of emerging currencies weakened during the session, although there were contrary cases in Latin America, while the dollar index rose 0.3%. US short rates oscillated, eventually falling slightly. Copper traded in London fell 0.6%.
“The market reaction to the CPI data has generally been very lukewarm, given that expectations of interest rate cuts in the US have practically not changed. We associate the pronounced rebound in Latin American currencies with other factors such as the constant price increases of some raw materials, such as copper or gold,” he told DF he Ebury market analyst, Diego Barnuevo.
The December CPI rose 0.3% month over month, and with this the inflation rate remained at 2.7% annually, without surprises for the public. However, the core CPI – which excludes food and energy, the most volatile components – registered 0.2% and 2.6% in the respective comparisonsboth one tenth below expectations.
Change of direction?
Local factors contributed to the sharp decline that the dollar-peso had at times. “There are a couple of things that distinguish us right now. With the Dipres dollar sales, there is a lot of liquidity going around, and this puts the exchange rate ‘looking south,'” explained the EuroAmerica chief economist, Felipe Alarcón.
The other important issue, he maintained, is the possible turning point of foreign positions in the forwardswhich had been growing unfavorably for the Chilean peso.
The large net position of non-residents It was reduced by about US$ 1.5 billion last Friday alone, remaining at about US$ 7.8 billion against the peso. It is the largest selling movement of foreign currency in one day since at least the beginning of 2022, which is when this record begins on the Central Bank monitor.
“Foreigners began to buy foreign currency significantly when liquidity in dollars was tightened, so being short in pesos and long in dollars was practically free. Now that has been undone, because the internal rate fell, and that implies that going against the peso is no longer free. So they are probably beginning to undo that long position in dollars that they built during the last few months,” Alarcón reviewed.
And Monday’s session remains to be compiled. The dollar-peso began the week with a sharp drop to two-year lows, as the criminal investigation against the president of the Federal Reserve dealt a blow to the greenback everywhere, due to concerns about the independence of the main central bank on the planet. Treasury sales contributed to making the Chilean peso one of the strongest currencies.
