The dollar reversed its initial fall this Wednesday in Chile, amid a fragile détente due to new details about the United States’ plan to end its war against Iran, before which the latter ruled out the idea of going through a ceasefire, and presented a counterproposal.
After opening with a decline to $909, The exchange rate remained with an increase of $2.4 to $918.2 at the close of the local marketaccording to Bloomberg data.
This came in line with he dollar indexan indicator of the global dollar, which crossed to gains of 0.1%although in Treasury bonds, however, saw slight drops in interest rates. For its part, Copper rose 1.7% to US$ 5.55 per pound, and Brent oil fell 1.8% to US$ 102.6 per barrel. That is to say, although they moderated, they have not reversed the trend of the day.
Negotiating attempts
The news of the moment is that last night they emerged Reports stating that the US presented a 15-point peace plan to Iranin line with the diplomatic efforts that Donald Trump revealed at the beginning of the week, after postponing the promised attacks against the Islamic republic until Friday.
“A large part of the risk assets and currencies of emerging markets rose slightly as a result. However, the markets remain unconvinced that a truce will be achieved in the short term, and Iran assures that no direct or indirect talks are taking place in the short term. This has caused the Chilean peso to suffer again as the hours have passed,” wrote the Ebury market analyst, Diego Barnuevo.
The White House spokesperson, Caroline Leavitttold the press this Wednesday that “the US has been involved in productive talks over the last three days,” and assured that “they will begin to see the regime looking for an exit ramp.”
Tehran stated that it is demanding five conditions to end the war, including reparations for the damage caused, as well as recognition of its authority over the Strait of Hormuz.
“The market remains skeptical of a real de-escalation, especially after new clashes and Iran’s refusal to recognize direct negotiations. This has sustained demand for dollars as a safe haven asset,” commented the Chief Analyst of Admirals Latin America, Felipe Sepúlveda.
He also noted that “while copper has found support in a recovery in Chinese demand and falling inventories, the conflict in the Middle East continues to weigh on global growth prospects.”
Signals from the IPoM
On Tuesday afternoon, the policy decision of the Central Bank of Chile was also announced. The entity announced that it maintained the Monetary Policy Rate at 4.5%and recognized that the energy shock would lead to inflation at levels of 4% in the short term, both statements in line with what the market had incorporated into prices.
“The statement did suggest that they were willing to raise rates if necessary. Ultimately, the decision will have a limited impact on markets as the Iran conflict continues to dominate,” published the BBVA team of strategists led by Alejandro Cuadrado.
In its March Monetary Policy Report (IPoM), the Central Bank detailed that it also reduced its estimates on Chile’s economic growth, and drew possible scenarios regarding the crisis in the Persian Gulf.
“Our broader view on the Chilean peso has been constructive, given the more market-friendly political outlook following last December’s election result. Our attempts to operate with this idea have been thwarted for now amid overall market volatility, but opportunities could re-emerge if there is a viable solution to the Iran conflict,” BBVA noted.
