The Chilean peso strengthens due to the global decline in the dollar and the increase in the price of copper

The Chilean peso rose 1.61% amid a global decline in the greenback and a rise in the price of the red metal, the country’s main export. The local currency also fell from 880 dollars after a new decrease in the Imacec.

According to the slogan Reuters, the dollar is quoted at the close of its trade at $879.30 buyer and $879.60 seller. The decline in the US currency coincided with the decline in the monthly indicator of economic activity, which fell by 1.2% on an annual basis; his second consecutive loss.

“Imacec’s result was explained by the decline in trade and, to a lesser extent, manufacturing industry. Meanwhile, the seasonally adjusted growth of Imacec was driven by the trend in mining,” said the Central bank in a note.

“Activity in key sectors, including services and manufacturing, remains under intense pressure due to high inflation, tighter financial conditions and a gradually deteriorating labor market,” said Andrés Abadía, chief economist for the Latin America at Pantheon Macroeconomics. .

“The very low level of demand indicators, together with the weakness of sentiment surveys, suggest that activity is expected to decline further over the next three months,” he added.

IMACEC fell by 0.3% in September, the first contraction since February 2021, according to updated data from the Central Bank.

Similarly, the broadcaster expects the Chilean economy to grow between 1.75% and 2.25% this year, but face a more challenging outlook in 2023 with a contraction of between 1.5%. % and 0.5%.

Copper extends hikes after Powell comments, China demand hopes

Benchmark copper on the London Metal Exchange (LME) rose after Federal Reserve Chairman Jerome Powell said rate hikes could ease “as soon as December.”

Higher rates stifle economic activity. And is that the dollar fell to its lowest level since June, which helped dollar-listed metals by making them cheaper for buyers with other currencies.

China, the largest consumer of metals, to announce a reduction in mass testing, an easing of Covid-19 quarantine protocols in the coming days, sources said Reuters. The deviations from its zero-COVID policy add to China’s moves to shore up the struggling real estate sector.

However, copper fundamentals remain low and prices are expected to move towards $7,500 a ton, said Carsten Menke, an analyst at Julius Baer.

“I don’t think any of the policies coming from China will have a big impact on demand for property or metals,” he said, adding that slowing urbanization, deteriorating demographics and weaker growth mean China won’t boost demand. of metals as much as in past years.

However, Bank of America analysts said given the metal’s scarce reserves, a weaker US dollar, a Chinese economic recovery and accelerating use of copper in green technology could push prices to $12,000 a ton. next year.

Among other base metals, aluminum rose 0.3% to $2,484.50 a ton; zinc gained 1% to $3,067; nickel rose 2.3% to $27,600; lead lost 1% to $2,171; and tin was up 1.5% to $23,260.

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