USD/CLP unlikely to trade below 800 on a sustained basis – ING

Market news

28 July 2023

USD/CLP unlikely to trade below 800 on a sustained basis – ING

Later today we could see the first big cut in Latam, in Chile. Economists at ING analyze the Chilean Peso (CLP) outlook.

The start of the easing cycle

Expectations are that the policy rate will be cut by 75 bps today to 10.50%. We doubt that will weigh on the CLP. But equally, we have been forecasting that the CLP lags the currency rally in Brazil and especially in Mexico because FX reserves are too low in Chile.

In June, Chile announced that it would start a new FX reserve rebuilding programme – ostensibly to redress last year’s massive FX support programme for the Peso, which saw FX reserves halve.

We doubt USD/CLP trades below 800 on a sustained basis.

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