- The USD/CLP is breaching into significant highs as the Chilean Peso crumbles.
- CLP down significantly as the Chilean central bank starts to axe interest rates in the face of evaporating inflation.
- Market economists expect the Banco Central de Chile expected to begin making 100-point rate cuts in the coming months.
The Chilean Peso (CLP) continues to decay in markets, falling over 5% against the US Dollar (USD) and sending the USD/CLP pair into ten-month highs near 896.0000.
CLP slides on waning copper demand, rapidly-dwindling inflation
The Chilean Peso has declined for three consecutive months against the Greenback as the Banco Central de Chile (BCP) struggles to keep interest rates on-balance as inflation recedes quickly from the Chilean economy.
Inflation reached a two-year low in Chile, down to an annualized 5.3%. The rate of inflation has dropped for 9 straight months, leaving the BCP in the unenviable position of having to step up rate cuts at an increasing amount.
The BCP cut its benchmark rate by 75 basis points at its September meeting, and market economists anticipate the Chilean central bank may have to begin examining 100-point cuts in the near future in order to support the broader economy.
Copper prices continue to sag in the market, down to $3.71 per pound to finish out the week, with the red metal down from January’s high of $4.27/lb.
Combined with weak copper values, copper demand from China continues to worsen as their economy faces downside constraints. Chile, the world’s largest single producer of copper, is especially exposed to floundering Chinese demand, keeping the CLP on the weak side.
USD/CLP Daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD consolidates below 0.6600 amid the US election uncertainty
AUD/USD remains on the defensive below the 0.6600 mark on Tuesday as traders seem reluctant ahead of this week's key event risks – the US presidential election and the FOMC policy meeting. In the meantime, the unwinding of the Trump trade continues to weigh on the USD and offers some support to the currency pair.
EUR/USD posts modest gains above 1.0850, all eyes on the US presidential election results
The EUR/USD pair trades with mild gains near 1.0880 during the early Asian session on Tuesday. The US Dollar edges lower as traders brace for the outcome of the US presidential election and a likely interest rate cut from the Federal Reserve, which supports some support for the major pair.
Gold price hangs near one-week low; downside seems cushioned ahead of the US election
Gold price remains close to a one-week low set on Monday, though the downside seems limited amid safe-haven demand stemming from the US election uncertainty and talks of an Iranian retaliatory strike on Israel.
RBA widely expected to keep interest rate unchanged amid persisting price pressures
Australia’s benchmark interest rate is set to stay unchanged at 4.35% in November. The focus remains on Reserve Bank of Australia Governor Michele Bullock’s comments and updated economic forecasts. The Australian Dollar could wilt if RBA Governor Bullock ramps up bets for a December rate cut.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.