Chile: Chilean peso weakens in August to multi-year low
August 5, 2015
In August, the Chilean peso depreciated to a new multi-year low against the U.S. dollar, continuing the generally weakening trend that began in May 2013. Moderating growth prospects for the Chilean economy mainly drive 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 4 August, it traded at 680.3 CLP per USD, which was the lowest value in many years. In fact, it was 6.8% weaker than on the same day of the previous month and 19.0% 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, expectations that the U.S. Federal Reserve might start raising interest rates as soon as September as well as financial market turmoil in China and Greece also contributed to the depreciation of the peso.