Chile Forum

It has been 108 trading days since the Dollar bottomed on May 2nd and prices have advanced 9%. The 1995 low in the cycle saw a similar 8.4% rise over a period of 105 days. The cycle low in 1980 saw prices advance by 10% in 108 days. Each occurrence also exhibited a bearish divergence in the RSI(14) at this point of development. Based upon these examples we should look for an interim top soon that is followed by a 50% to 62% correction of the rally from the July-August lows (currently 76.55 to 75.82) that tests the 89-day exponential moving average and the 34-day Bollinger Band. This could take four to five week. If the Dollar holds at support it should be capable of pushing into the 90’s.

gato wrote:Now:

1 U.S. dollar = 533.33 Chilean pesos

greg~judy wrote:and just so all might again realize the roller-coaster we ride...
we might also offer a 5yr track of incline~decline
sometimes a strong stomach is needed to ride on the back of this beast?

5yr.png

greg~judy wrote:omg... this is starting to look ugly again...!
chp gaining strength - 10%+ since the heady 530 back in nov.
now dismally drooping under the 50dma AND 200dma...omg!
please - start those prayers once more...
om mane padme hum... om mane padme hum...

Fugger wrote:g~j: I looked at the CLPUSD data since 1985 and adjusted for difference between inflation Chile and USA. Then I grouped the resulting value in ten deciles and looked what the subsequent 12 month return was. That the picture you get (each bar represents a decile with the corresponding CLPUSD value).

From a value criteria the current exchange rate is clearly in the most expensive decile. The average performance is 6.8%, so no need to despair. I did the same thing for a momentum indicator, but the predictive power is lower and only for a time horizon of 3 months.

Chile Minister Says Peso Gains Warrant Look at Dollar Buying

Feb. 10 (Bloomberg) -- Chile’s central bank should consider renewing a dollar-buying program to curb appreciation of the peso, South America’s best performing currency in the past month, acting Finance Minister Julio Dittborn said.

“Obviously it’s a concern that the peso is strengthening so much,” he said in a telephone interview today. “The central bank should evaluate whether it is appropriate to intervene again or not like it’s done in previous years.”

The peso has appreciated 6.2 percent in the past month and 8.1 percent since the central bank ended daily auctions on Dec. 16 through which it bought $12 billion last year. The currency of the world’s largest copper producer may continue to strengthen on rising metal prices, Leonardo Suarez, chief economist at Larrain Vial SA, said on Feb. 9.

The government, whose fiscal policy doesn’t have a “strong” influence on the exchange rate, isn’t studying measures to weaken the peso, Dittborn said. The ministry instead will take care not to implement measures that strengthen the currency. Whether to buy dollars is a decision for the central bank, he said.

The one-month peso forward rate weakened 0.2 percent to 481.5 per dollar from 480.75 after Dittborn’s comments, according to Alex Pigatto, a trader at Nomura Securities Inc. in New York.

Fruit Industry

“It’s important to us that prices in the economy remain aligned with long-term prices,” he said. “If the price of the dollar falls a lot now, it’s a concern for some assets.”

Chile’s fruit producers’ federation, known as Fedefruta, has asked the central bank to take steps to weaken the peso, Antonio Walker, president of the industry group, said by telephone last month.

Chile’s central bank, which operates under a flexible exchange-rate regime, intervened in the currency twice under the former bank President Jose De Gregorio.

Rodrigo Aravena, chief economist at Banchile Inversiones in Santiago, said it was premature to expect the central bank to resume dollar purchases.

“We’re far from an intervention,” he said by phone today. “The real exchange rate is above the levels of the previous interventions. It’s not the right time.”

Stimulus Measures

The government also is “far” from taking steps to stimulate growth, with the economy expected to expand between 4 percent and 5 percent this year, Dittborn said.

The jobless rate was 6.6 percent in the three months through December, the lowest rate since before the recession of 2009, while gross domestic product expanded an estimated 6.3 percent in 2011, he said.

Dittborn, 60, has a Master’s in Economics from the University of Chicago and has taught at schools including the University of Chile, the Pontifical Catholic University of Chile and Andres Bello University. He was a member of Congress from 1997 to 2009.

Dittborn is serving as Finance Minister until Felipe Larrain returns from vacation.