The dollar broke the $940 mark this Friday, making its biggest weekly gain in three months. after Chile experienced an increase in the current account deficit and the lowest quarterly GDP growth in nearly two years, amid a depressed investment environment amid expectations of continued rate hikes by the United States Federal Reserve and expansion of Covid-19 in China.
According to Bloomberg, the price of the dollar increased by $21.75 to $943.53 at the end of operations in Chile. With this result, the exchange rate records a weekly increase of $49.28, the highest since the week ending Aug. 19.
“The larger-than-expected current account deficit and low economic growth have negatively impacted our exchange rate. However, we do not believe it will have an additional impact on what we saw on Friday, as we expect it to recover by 2023 fall.” said to DF the investment manager of Aurea Group, Hernán Campos.
According to data published this morning by the Central Bank, the balance of payments current account deficit widened to US$9,428 million in the third quarter (9.9% of GDP), much higher than the $7.3 billion estimated in a Bloomberg survey. For his part, Chilean GDP growth was 0.3% year-on-year in the quarter, the lowest since the first quarter of 2021.
“The deficit of 9.9% of GDP means that the state cannot finance its spending without taking on debt. The national debt is already around 37% and a significant part of the market is wondering whether these levels or higher on time,” said the director. of Comunidad merchants, Felipe Posada.
The Chilean peso depreciated 2.16% and was the world’s weakest currency during the sessionfollowed by the Venezuelan bolivar (-2.12%), while the Colombian peso rose 0.20% and the Brazilian real gained 0.62%.
Campos also indicated that “the peso’s depreciation over the past three days has been related to more cohesive discourse by members of the Fed as U.S. retail sales came in higher than expected and demand for dollars increased by the pension funds for changes in funds such as A and B”.
When closing, the dollar index grew by 0.24% to 106.95 pointswhile two-year treasury bills rose 4.9 basis points to 4.50%. The yield on a bond is inversely related to its value.
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copper and porcelain
For his part, Buyer place closed down 1.32% to US% 3.65 the pound on the London Metal Exchange (LMB). The red metal posted a weekly drop of 4.67% – its biggest since early September –hit by the latest outbreak of Covid-19 in China, which has reached its highest number of new cases since last April.
“We have another increase in daily cases in China, which could tighten restrictions and continue to put downward pressure on copper. The price has weakened in recent days after rising significantly the week before, mainly due to less restrictions in the controls of the Covid measures,” Capitaria senior analyst José Tomás Riveros wrote in a note.
China’s National Health Commission told local authorities not to resort to “excessive” practices such as forced confinement, but also urged them to avoid relaxing health restrictions “irresponsibly”.
Copper inventories rose 11.92% weekly to 208,894 tonnes (US$1,681 million) in the three warehouses controlled by Cochilco, mainly due to strong restructuring in the BML and the Shanghai Futures Exchange.