In July, the Chilean peso weakened from 728.81 to 760.81 against the US dollar. MUFG Bank economists expect CLP to remain under pressure in the second half of this year. Nonetheless, there is room for meaningful appreciation afterwards.

Significant reduction in covid cases in July led to relaxation of restriction measures

“The number of COVID-19 cases dropped significantly in July, reflecting the advanced stage of vaccination and containment measures. In such a context, the government has decided to ease restrictive measures in several regions of the country, which bodes well for the pace of the economic recovery to come. Regardless, the spread of the Delta variant overseas still brings uncertainties over the COVID scenario, potentially adding some pressure on CLP. ”

“On the other hand, despite the accommodating tone of the BCCh, further increases are expected at a gradual pace, which, along with the possibility of a rise in copper prices, has somewhat offset the pressures at the drop on the CLP. “

In the 4th quarter, the path of the CLP will be influenced by the legislative elections scheduled for November-December with the risk of an election of a populist candidate. This risk was somewhat reduced after the defeat of a Communist candidate in the primaries against his more moderate rival. Still, the CLP could depreciate slightly amid expectations of an EDF cut. ”

“In the first half of 2022, the CLP could appreciate thanks to more consolidated global growth benefiting Chilean exports.”

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