Chile: Chilean peso appreciates in March
March 9, 2016
The Chilean peso gained some strength recently, reversing its depreciating trend. The peso depreciated gradually between May 2013 and January of this year. However, after hitting a multi-year low in January, the currency has appreciated in recent weeks. On 9 March, the currency traded at 677.8 CLP per USD, which represented a 5.1% appreciation over the same day in February and a 4.3% gain in value in this year so far. However, compared to the same day in 2015, the reading represented a 7.9% depreciation.
The recent appreciation in the peso mainly comes on the back of a timid recovery in prices for copper, which is Chile’s top export. While copper prices had been on a downward trajectory for over four years and dropped to a multi-year low in January, prices have been on the rise since. Slowing demand for copper from China, the world’s largest copper consumer, along with global oversupply lead to a decline in copper prices in recent years, dragging down the value of the Chilean peso. However, copper production cutbacks along with expectations for increased fiscal stimulus in China recently drove the price of the red metal up, contributing to the appreciation of the peso observed in recent months.