Chilean Peso Firms As IPSA Hits Fresh Records On Dollar Weakness And Election Bets

The Chilean peso and Santiago’s stock market are moving in lockstep again, both leaning in favour of a weaker dollar and a more market-friendly political map.

By Friday morning, the interbank rate hovered around 928–930 pesos per dollar, close to Thursday’s 928.8 close and well below the 934.8–935.1 levels seen earlier in the week.

Over the past month the currency has strengthened about 1.5% and is up nearly 4.8% this year, even as the US Dollar Index sits near 99.6 after a modest rebound, with traders still pricing a December rate cut by the Federal Reserve.

For the peso, the global backdrop is doing half the work. Copper prices remain firm and Chile still offers one of the highest real interest rates in the region after the central bank held its policy rate at 5%, signalling that inflation is essentially at target but monetary easing will be gradual.

Regional FX desks describe investors rotating into high-carry Latin American currencies as long as the dollar stays capped below the 100 level.

Domestic politics are doing the rest. Opinion polls now give right-wing candidate José Antonio Kast a double-digit lead over centre-left rival Carolina Jara in the November presidential runoff.

Local brokerages openly link the IPSA’s surge to expectations of a more orthodox economic agenda: MIB Inversiones’ José Miguel Matte says the index’s real “jump” will come once investors believe Kast can implement his programme, while Credicorp Capital’s Klaus Kaempfe talks of “four or five brilliant years” for Chile if a new investment cycle takes hold.

The S&P IPSA added another 0.8% on Thursday to close at 10,078 points, its third consecutive record and roughly 50% higher year-to-date.

Leading the advance were SONDA (+4.47%), AAISA (+2.96%), ENTEL (+2.71%), CENCOSUD (+1.97%) and COLBÚN (+1.75%). The laggards were ABC (-3.89%), SMU (-1.92%), ORO BLANCO (-0.97%), CONCHATORO (-0.95%) and FORUS (-0.92%).

Latam Airlines, Mallplaza, Cencosud, Banco de Chile and Santander again dominated turnover, with Latam trading close to 14 billion pesos in value and offshore investors keeping the main Chile ETF near its 52-week high.

Technically, USD/CLP remains in a clear downtrend on the daily chart, with spot below its 20-, 50- and 200-day moving averages and RSI still subdued, while the four-hour chart suggests a short-term base forming around 920–922.

The IPSA, by contrast, is pressing the upper Bollinger band with daily and weekly RSI in overbought territory. That mix leaves the peso with room to grind firmer if the dollar softens again, but warns that Chilean equities may soon need a pause before any further rally built on conservative-policy hopes.

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