Today started off poorly for the Chilean peso, which declined against the U.S. dollar on July 23. In the early hours of trading, the dollar gained almost half a percentage point. Currently, the dollar is trading at an average of 945.30 Chilean pesos, reflecting a 0.4% increase from the previous session’s rate of 941.50 pesos.
Over the past week, the dollar has risen by 2.08%. When looking back a year, it has seen an overall increase of 10.43%. This recent trend breaks a flat streak in market rates experienced over the last two days. The volatility seen this week is slightly less than that observed over the past year, indicating that price movements have been more stable than anticipated recently.
After a year without economic growth, Chile is expected to see a rebound in 2024 and 2025, according to forecasts from the Organisation for Economic Co-operation and Development (OECD). They anticipate an improved outlook due to rising real wages, attributed to falling inflation and declining interest rates, which should allow Chileans to enhance their consumption.
The OECD projects a production increase of 1.8% in 2024 and 2.5% in 2025. There is optimism as business confidence has improved, along with demand for minerals, which will bolster exports. They estimate that inflation will meet the central bank’s target by the second half of 2024 and will then decline at a slower rate.
The Chilean peso has been the country’s legal currency since 1975. It reintroduced the peso sign ($) and is regulated by the Central Bank of Chile, which oversees the money supply. The peso was established in 1817, following the country’s independence, but the decimal system was not implemented until 1851, making it divisible into 100 centavos. Over time, the currency has evolved, but it is currently represented in whole pesos.
Today, you can find coins in denominations of 5, 10, 50, 100, and 500 pesos. The latter was the first bimetallic coin produced in Chile. Although there were plans to introduce coins of 20 and 200 pesos in 2009, the project was rejected by Congress. In 2017, it was decided to stop issuing coins of 1 and 5 pesos.
Furthermore, in October 2018, the Central Bank of Chile announced that it would start withdrawing 100 peso coins minted between 1981 and 2000 to reduce their coexistence with current coins, though these older coins remain valid.
On the economic front, Chile exhibited a robust fiscal response in 2021, leading to a growth rate of 11.7%. This was one of the fastest recoveries globally following the coronavirus pandemic, largely driven by consumption fueled by pension fund withdrawals and direct fiscal support.
Despite this recovery, the labor market has rebounded more slowly. Inflation has also posed significant challenges, driven by strong demand pressures, rising commodity prices, supply disruptions, and the depreciation of the peso. Consequently, the country now faces its highest public debt levels in three decades, reaching 37%.
Image and News Source: https://www.infobae.com/noticias/2024/07/23/chile-cotizacion-de-apertura-del-dolar-hoy-23-de-julio-de-usd-a-clp/
