The Chilean Peso is lagging the rally of its Latam peers. Economists at ING analyze CLP outlook.
Chile may prove a test case for Latam FX and easing cycles
June saw the central bank warn that the easing cycle could start in the ‘short term’. A 50-75 bps rate cut is now expected at the 28 July rate meeting.
The central bank will cite inflation expectations anchored at 3% as the reason for the cut – even though core inflation is still 9% YoY. Chile may prove a test case for Latam FX and easing cycles.
Regarding Chile’s main export, Copper – we see it at neutral $8300-8600/MT this year. And we think USD/CLP stays near 800.
Source: https://www.fxstreet.com/news/usd-clp-to-stay-near-800-ing-202307211406