Pesos and Protests

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vamoschile
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Pesos and Protests

Post by vamoschile » Fri Nov 01, 2019 10:14 am

I am still relatively new in Chile and I am curious where the forum thinks the peso will land after things calm down in Chile. Does everyone think its a good time to make large purchases if you are holding dollars in the current enviroment? Or do you think its wiser to wait for things to stabalize and stay stable before buying major items like a car, house, etc. What are some wise things people should do who are holding dollars? What are some wise things people should do who are holding pesos? For those fortune tellers how high do you think the peso will get? Do you think we are on the high end now?

Thanks in advance!

Jamers41
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Re: Pesos and Protests

Post by Jamers41 » Fri Nov 01, 2019 2:30 pm

Personally my gut says waiting for a bit is the best choice currently. Things could go in different directions. The possibility is there (and I certainly hope for it) that things will calm down politically and that the peso will recover some. Keep in mind that a lot of the USD/CLP currenty exchanges are performed by people here, there's not that many traders in the US with a keen interest in the Chilean peso. So since we are currently enjoying a long weekend, there are Chilean traders who gobbled up some dollars (and drove up its value) before the long weekend started, since it was their last chance to trade for a while......if things become more calm this coming week, the dollar could go back down. HOWEVER, this is definitely not guaranteed as we are currently in uncharted waters.

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Re: Pesos and Protests

Post by admin » Fri Nov 01, 2019 4:02 pm

we hit 740, the central bank stated their line in the sand was around 750. If they step in, I would expect rubber band effect to take it the other way as all the big boys such as the mining industry rush to catch the weak peso while it last. it would probably get the attention of the FX traders too.

so your upside from here is only about another 10 pesos, your down side is possibly 50 pesos or more.
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Baltimore
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Re: Pesos and Protests

Post by Baltimore » Fri Nov 01, 2019 4:08 pm

Yeap, the Central Bank has nearly 100 billion USD in reserves, not sure they would let the peso lose much more value without intervention.

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Re: Pesos and Protests

Post by admin » Fri Nov 01, 2019 6:23 pm

you would also need to add in some of the following:

government increased spending for social programs. whatever they finally are, they are going to be spend something.

reconstruction of damage to public infrastructure.

stimulus programs for the economy.

private companies that were damaged will need to repatriate large sums for fixing things.

insurance companies will definitely be bringing in money from outside the country to cover their liabilities.

big investors and hedge funds, in spite of what is going on, are looking at this as a buying opportunity. think JPMorgan just announced they were increasing their allocation to chile. as screwed up as this is, chile's economy is still one of the least risky in the whole region.

government and private companies will probably be issuing large amounts of debt, to cover everything, simply because the interest rates are so low; rather than say cashing in the sovereign wealth fund or tapping resources they have outside chile.

the template, at least in the short-term should be the 2010 earthquake. the peso did not even move until they canceled APEC, and everyone suddenly started paying attention to what was happening in chile.
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mem
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Re: Pesos and Protests

Post by mem » Sat Nov 02, 2019 12:04 am

admin wrote:
Fri Nov 01, 2019 4:02 pm
we hit 740, the central bank stated their line in the sand was around 750. If they step in, I would expect rubber band effect to take it the other way as all the big boys such as the mining industry rush to catch the weak peso while it last. it would probably get the attention of the FX traders too.

so your upside from here is only about another 10 pesos, your down side is possibly 50 pesos or more.
We actually bounced off 750 briefly on the hourly charts over the last couple days. Getting 742 at estado atm today.

It very well may bounce down soon though.

mem
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Re: Pesos and Protests

Post by mem » Sat Nov 02, 2019 12:17 am

vamoschile wrote:
Fri Nov 01, 2019 10:14 am
I am still relatively new in Chile and I am curious where the forum thinks the peso will land after things calm down in Chile. Does everyone think its a good time to make large purchases if you are holding dollars in the current enviroment? Or do you think its wiser to wait for things to stabalize and stay stable before buying major items like a car, house, etc. What are some wise things people should do who are holding dollars? What are some wise things people should do who are holding pesos? For those fortune tellers how high do you think the peso will get? Do you think we are on the high end now?

Thanks in advance!
Assuming you live in Chile...and if you are holding a lot of dollars then converting to CLP now certainly seems to be the right move. You can always convert back to USD when the rate 550 or 600 and make a nice profit on the spread.

I have a businessman friend that has live in chile for a long long time and he had a biz trip planned to Argy this weekend. But the national holidays crept up on him and he forgot to get bunch of USD out of the banks before Thursday. He calls me on Thursday morning wondering of I had several thousand USD in cash laying around he could physically borrow so he could use it in argy, and then pay me back on Monday when the banks here opened. I asked why he couldn't just use clp and i guess the usd is in super high demand there so the buying power is crazy. I felt bad I couldnt help him out, but any usd of mine stays in the US...its not like this is Uruguay where there are ducats or ATM machines spitting out USD. I dont know of any ATMs in chile that output USD.
Made me wonder though...maybe I should have a position in USD here...only becasue so many Argys use USD as a hedge against the argy peso shenanigans. I think it may be that a lot of chileans are saving in USD as well...if nothing else they use the USD on shopping trips to AR. Then of course right after I talked to my buddy I heard about the USD capital controls in AR (like $200 usd a month) Not sure if that kayboshed his biz trip or not

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Re: Pesos and Protests

Post by admin » Sat Nov 02, 2019 8:22 am

Argentina just further restricted foreign transactions to $50 on ATM cards. guess argies found a way around the $200 limit by say using pay pal or similar online systems.

there is the possibility that we get another weakening of the peso, once the economic stats from this mess starts coming in, and companies have a full quarter / end of the year report on the damages to their earnings. too late this quarter, as earning season has started, but we might get some hints from various companies about how bad the damages are.
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Re: Pesos and Protests

Post by Zenth » Sat Nov 02, 2019 12:51 pm

I believe Chileans hoard US Dollars as most of the world does. That’s why 90% of US paper currency is outside the USA.
As far as betting on the CLP’s direction, hedge your bets. That’s what the big money guys do.

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Re: Pesos and Protests

Post by admin » Sat Nov 02, 2019 1:22 pm

Zenth wrote:
Sat Nov 02, 2019 12:51 pm
I believe Chileans hoard US Dollars as most of the world does. That’s why 90% of US paper currency is outside the USA.
As far as betting on the CLP’s direction, hedge your bets. That’s what the big money guys do.
yea, but they are no where near as obsessive about it as Argentina, or the rest of latin America for that matter.

I can never for example recall closing a property deal in chile in dollars, that did not have a foriegner involved. Even when priced in dollars, they are often closed in pesos at the rate of the day.
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paladin
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Re: Pesos and Protests

Post by paladin » Sat Nov 02, 2019 8:48 pm

I

I question whether there are many Chileans even have any money to save in any currency. From my conversations with those who live in the East of Santiago, none of them, not one, has any savings at all. All are up to their eyes in debt and always have been. It’s the only way they can live the life of their friends.

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Re: Pesos and Protests

Post by admin » Sat Nov 02, 2019 8:57 pm

paladin wrote:
Sat Nov 02, 2019 8:48 pm
I

I question whether there are many Chileans even have any money to save in any currency. From my conversations with those who live in the East of Santiago, none of them, not one, has any savings at all. All are up to their eyes in debt and always have been. It’s the only way they can live the life of their friends.


Contrary to the bullshit being pushed in the press, not all chileans are poor. Not even a majority are poor.

Chileans tend to put their money in to real estate for safe keeping and investment; but, that is a diffrent conversation for another thread. they are no playing the fx markets any serious way.

why are we yelling? :lol:
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