Chile Forum

many of the contributors on this forum have a much deeper understanding of global economics than i do, so i would appreciate any comments on the topic of converting USD to CLP. i am set up to transfer some of my savings from the US to Chile, and obviously i want to do that at a time when the conversion rate is favorable to me. i know that no one can predict the future.....but i also know that certain patterns or trends can be anticipated and used effectively. here are my questions:

1) if we assume that barack obama will win the election in november, is this likely to have an effect on the exchange rate (USD to CLP)? in which direction?
2) are there other big, predictable events on the horizon that might cause a dip or a rise in the value of the CLP relative to the USD?...like, maybe...the continued drop in oil prices, or an agreement with bolivia and/or argentina regarding gas imports to chile, or the on-going collapse of the US housing market?

Thanks Rune, I had never looked as far back as 99.

cali_chile48 wrote:i want to do that at a time when the conversion rate is favorable to me. i know that no one can predict the future.....but i also know that certain patterns or trends can be anticipated and used effectively.

There are investors who claim to use patterns or trends to time the market. I've studied market timing, and I'm not sold on it. It's very hard to follow a system when you're at the right edge of a chart. And, a lot of timing systems that do well, often only do well for a period of time, and fall apart very badly. Before falling for any timing scheme, read this article about Mark Hulbert's analysis. He's well known for monitoring timing systems and "newsletters" (sentiment guidance). It's not a pretty picture:

www [dot] fundadvice [dot] com/FEhtml/PsychHurdles/0304b.html

If it were me, I'd try to hedge the USD and CLP, so if either move drastically you'll be covered. I.e., diversify. Maybe into EUR too. Maybe also dollar cost averaging (move into positions over time to get the average). I know some people who will say a person can do better with more aggressive strategies (like market timing). But, if everyone could time the market, wouldn't they do it? I mean, if it sounds too good to be true...?

cali_chile48 wrote:1) if we assume that barack obama will win the election in november, is this likely to have an effect on the exchange rate (USD to CLP)? in which direction?

To many variables. If he raises taxes and balances the budget, some people say that will stifle growth and investment. Others will say growth is in the toilet now after Bush tax cuts -- and we have a huge deficit on top of that. Personally I think the deficit is worse for the dollar than poor growth. But, that gets back to monetary policy having competing interests. (Some people don't care about dollar strength, they'd rather have a job.).

Anyway. When there are a lot of variables, I think it's better to diversify, and be prepared to get the average of whatever happens. I'm not an aggressive investor.

Mark

The relative sunspot number is an index of the activity of the entire visible disk of the Sun.

One thing that you need to look at in this mess is that there is no real way for anyone to determine just how deep those derivatives instruments go in to the market. They are so complex even the experts are not really sure which ones are which, and how much banks have on their balance sheets. A lot are saying that there will be many more write downs and banks biting the bullet over at least the next couple of years. Regardless of who is elected, they are going to be stuck with that mess for years to come.

I think however you will see the dollar get hammered if McCain is elected. The global markets are not going to like the idea that the current political situation is what they are going to have to deal with for the next 4 years, and another war hawk at the front desk. Oil will do good and other commodities, if that happens.

On the other hand, the thing I really do not like about Obama is that he specifically mentioned in his acceptance speech closing off shore tax havens and such. That translates in his voting record to screwing the expats, big and small, by raising taxes on them and making it harder for Americans to work oversees. He has a shoot international trade in the foot under the cover of "saving American jobs" bs going on. Isolationism, even if just a political paint job, is never good. I like him over McCain, but I want to hear some strong free trade policies that are not targeted at burning Americans overseas. Americans oversees simply should not pay taxes in the United States. The corporations that he claims to be stopping from taking American jobs oversees don't pay taxes in the United States.

Rune, you've cracked it!!

In case someone thought there was a slight chance that Rune might be for real...

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An opinionated person is somebody who is not that well informed and insists on proving it.

I just asked my employer to pay my salary 50/50 dollars & pesos. They agreed! This way I will always kick half of myself, while the other half made the right decision. I think it's a good balance.

i'm not expecting a return to the "glory days" of 700 CPL to the dollar. it seems that 500 to 550 is normal. right now its about 516....i'd be happy with a short term spike to 550 right after obama gets elected....

People are absolutely getting destroyed on their anti-USD trades since about June-July...This is in the face of nearly 99% of the world claiming the USD is doomed...Well looky looky...The USD is breaking out to the upside on nearly every FX chart in the world minus BRL and MXN (I expect those to join the party also soon)...The fact is that the world economy is in a nosedive and the rush to cash is going to further decimate the anti-USD trade going forward. I would be careful with the CLP vs. USD. CLP is heavily based on price of copper, which could crater along with commodity prices. I would not be surprised to see at least a $600 print on the USD-CLP pair. For reference, look at the EUR, GBP, CAD, AUD, NZD...All have been hammered in only about a month or so. Don't buy the koolaid.