Chile: Chilean peso depreciates to multi-year low in July
July 7, 2015
In July, the Chilean peso depreciated to a new multi-year low against the U.S. dollar, continuing the generally weakening trend that has been in place since May 2013. Bleaker growth prospects for the Chilean economy has been the primary force behind the downward trend. This trend was interrupted from January to mid-May of this year as a strong Q4 2014 GDP reading and a transitory recovery in copper prices temporarily painted a rosier picture for the economy.
The currency has depreciated further against the U.S. dollar lately and, on 7 July, it traded at 649.5 CLP per USD, which was the lowest value in many years. In fact, it was 2.0% weaker than on the same day of the previous month and 18.0% weaker on an annual basis. The currency lost value because Chile’s important mining sector is struggling to regain momentum in the face of falling prices. Recent subdued economic activity has also affected the currency. In addition, consumer and business sentiment suffered from corruption scandals and political uncertainty earlier this year. What is more, aversion to increased global risk against the backdrop of the Greek debt saga put additional pressure on the peso.