Chilean peso unable to appreciate despite positive economic data – London Business News | Londonlovesbusiness.com

The Chilean peso again showed difficulties at the beginning of the week to break the 900 pesos per dollar barrier, a key level that has been limiting the CLP for the last three trading days.

This dynamic has occurred despite a series of positive economic indicators that, in theory, should have provided support to the local currency. Both industrial production and copper production in Chile, two key sectors for the country’s economy, have shown solid gains.

In August 2024, copper production reached 470.50 thousand tons, its highest level so far this year, surpassing the 443.60 thousand tons recorded in July.

These data are a reminder of Chile’s leadership in the global mining sector, as the figure also exceeds the country’s historical average copper production, which stands at 466.64 thousand tons since 2011. However, these advances have not been enough to significantly strengthen CLP.

Similarly, industrial production in Chile grew by 5.2% y-o-y in August, driven mainly by an 8.9% increase in mining production. Within this category, metal mining advanced by 8.2%, while non-metallic mining grew by 14.3%. Despite these encouraging indicators, the Chilean peso continues to face obstacles in appreciating below 900 pesos to the dollar.

Among the factors that have limited the Chilean peso’s recovery potential is the increase in the unemployment rate, which reached 8.9% in August 2024, its highest level since September 2023. In addition, the loss of relative momentum as Monday’s trading day unfolded in China-linked assets following the recent stimulus measures has affected risk-linked currencies such as the CLP.

In the short term, the fate of the Chilean peso could depend on upcoming U.S. jobs data, which could be a catalyst for growth and risk-linked assets, such as the Chilean peso.