The dollar is heading for its biggest weekly decline in more than a year

The exchange rate traded this Friday with a decline of $ 0.35 compared to yesterday, which placed it at $ 769, while copper closed the session with a rise of 0.15% at US $ 4.246 per pound.

The exchange rate closed this Friday with a decline of $ 0.35 compared to yesterday, which placed it at $ 769, according to Bloomberg. In this way, the dollar in Chile registered its sixth day down, with a cumulative weekly decline of $ 15.84, the highest since mid-April 2020.

At the local level, the approval of legislating the fourth withdrawal from the AFPs and the latest decision of the Central Bank to raise the interest rate, has caused high volatility in the local market, having a direct effect on the dollar.

“Every day that passes increases the uncertainty regarding the fourth withdrawal of funds and it will be gravitant to see the next steps of our economy and the decisions of the Central Bank,” explains the head of analysis of XTB Latam, José Raúl Godoy.

“If we see a new withdrawal, it is probable that the pressure on inflation will continue and, in this scenario, the agency will continue to raise rates to control inflation, which is already forecast to reach 5.7% in December, without considering a new withdrawal of funds, “he added.

Likewise, the fall in the exchange rate occurs when copper closed the week on the London Metal Exchange with a rise of 0.15%, which places it at US $ 4.246 per pound, according to information published by Cochilco.

Along these lines, Capitaria’s head of trading studies, Ricardo Bustamante, explains that “If China continues to show weak data and concerns about coronavirus cases in the world continue, copper may continue to fall in the short term, so less dollars will enter Chile, which means that the greenback appreciates against the Chilean peso. “

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Looking at the USA

As usual, the attention of Chilean investors is also focused on the decisions that the Federal Reserve may make regarding the August employment report, since, if positive, the central bank could begin to reduce the purchase of stimuli.

At this time, the dollar index -which measures the value of the US currency in relation to a basket of foreign currencies- falls 0.13% to 92,112 points.

“There are two important forces when we look at the direction of the dollar. The first is the global recovery and the momentum we’ve seen more recently and the second point is obviously the central bank response to that “, Global market strategist at JP Morgan Asset Management in Melbourne, Kerry Craig, told Reuters.

“Because those two forces are competing right now, we are relatively neutral on the direction of the US dollar “, added.


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