The Chilean peso became the worst performing currency in the last three months as the inflation soared and the central bank kept supporting exporters.
The peso dropped 11.8 percent against the U.S. dollar during the last three months as the government has been buying $50 million each day to support the national exporting companies keeping output growth up. Meanwhile inflation accelerated to 9.4 percent — the fastest rate in 14 years putting such practice to question.
Going up from the worst position to considerable gains may be close enough as the analysts expect that the central bank will stop buying dollars and will focus on inflation through currency strengthening.
Investment bank Credit Suisse forecasts that the Chiles peso will gain 4 percent to 475 per U.S. dollar by the years end. BBVA expects peso to appreciate to only 480 per dollar, but the average forecast of the currency analysts is quite pessimistic — decline to 500 per dollar.
This week USD/CLP rate declined from 503.45 to 495.80 as the currency pair continued to correct after the July 1 peak at 525.76.
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