Chile’s IPSA Pulls Back from Record as Copper Boom Drives Peso Surge and Inflation Falls Below Target

Chile’s markets delivered a week of extremes. The IPSA surged to a new all-time high of 11,693 points on Tuesday — extending a rally that has taken the index up 43% over the past twelve months and nearly 90% from its 2023 lows — before a sharp reversal erased the gains and then some, closing Friday at 11,210.78, down 1.83% on the week.

This is part of The Rio Times’ daily coverage of Chilean markets and Latin American financial news.

For context on regional markets, see Brazil’s Ibovespa for the same session.

Also tracking regional peers: Colombia’s COLCAP closed the same session.

The pullback was not driven by any Chile-specific shock but rather by global risk-off sentiment triggered by the commodities crash of January 31 and its aftershocks, which sent copper briefly below $11,000 per metric ton before recovering to $12,850 by Friday.

The peso told a different story entirely. While equities pulled back, USD/CLP plunged from 872 to 855.64 — a 1.92% appreciation that took the currency to its strongest level in over two years.

The divergence is not contradictory: the peso is driven by copper, and copper recovered faster than equities. With Cochilco raising its 2026 copper forecast to $4.95 per pound and LME copper having hit an all-time high of $13,300 per metric ton on January 6, the structural bid under the peso remains formidable.

Research from Discovery Alert shows that a 1% copper price change correlates with a 0.3-0.4% Chilean peso movement — a relationship that has been amplified in 2026 as copper’s 50% year-on-year rally has turbocharged the currency.

The week’s most significant macro development came from the inflation front. Chile’s annual inflation fell to 2.8% in January — dropping below the Banco Central de Chile’s 3% target for the first time since 2021.

The milestone validates the central bank’s easing cycle and, according to Bloomberg, the BCCh has signaled that rates should fall to the 4.25% midpoint of its estimated neutral range — implying at least 75 basis points of additional cuts from the current 5.00% level.

For equities, this is unambiguously bullish: lower rates compress discount rates, boost corporate earnings through cheaper financing, and attract yield-seeking capital into the stock market.

S&P IPSA daily chart showing the rally to all-time high of 11,693 and subsequent pullback to 11,210. RSI at 71.25 indicates overbought conditions. Source: TradingView

USD/CLP daily chart showing the peso’s acceleration to multi-year highs at 855.64. RSI at 35.31 signals oversold conditions for the dollar. Source: TradingView

Chile is living through a rare alignment of positive forces. The copper super-cycle — driven by AI data center demand, the energy transition, and chronic supply constraints — has pushed the country’s primary export to all-time highs, generating a windfall of foreign exchange inflows that has simultaneously strengthened the peso and boosted government revenues.

The Oregon Group notes that LME copper’s 50% year-on-year increase to $13,300 per metric ton is not speculative froth but a structural repricing driven by the International Copper Study Group’s forecast of a 500,000-ton supply deficit in 2026.

The political backdrop has added fuel to the rally. Chile’s December elections delivered a more market-friendly government, and Hightower Advisors notes that the pivot toward pro-business fiscal policies has “fostered global confidence” in Chilean assets.

The IPSA’s 43% twelve-month return — the best in Latin America — reflects this political premium, with foreign institutional flows accelerating since the election result.

Yet the week’s pullback exposed the fragility beneath the surface. Goldman Sachs projects Chile’s GDP growth at just 1.9% for 2026 as part of its broader LA7 forecast, while Scotiabank warns that carry-over growth could be as low as 0.6% if no additional momentum materializes.

The IPSA’s 90% rally from its 2023 lows has priced in a lot of good news — and the weekly RSI at 79.88 is the most overbought reading since the post-election euphoria of late 2025.

S&P IPSA — Key Levels

USD/CLP — Key Levels

The IPSA presents a textbook overbought correction pattern. The weekly RSI at 79.88 is the highest reading in over a year, while the daily MACD histogram has turned negative (-64.315) for the first time since the rally began — a classic bearish divergence signal.

However, the index remains firmly above all major moving averages and inside the Ichimoku cloud on the daily timeframe, suggesting the pullback is corrective rather than trend-reversing.

The 4-hour chart shows RSI at a neutral 54.05 with price stabilizing near the 11,200 level, indicating the immediate selling pressure has abated.

The peso’s technical picture is the mirror image. USD/CLP’s weekly RSI at 33.65 and stochastic at 23.39 are deeply oversold — the most extreme readings since the copper-driven peso rally of mid-2024.

The daily RSI at 35.31 confirms the oversold condition, but the MACD remains in a strong bearish trend (signal at -11.10), suggesting the peso’s momentum has not yet exhausted itself.

The 4-hour chart shows the first signs of stabilization, with RSI at 43.24 and the MACD histogram decelerating, but price remains well below all moving averages and the Ichimoku cloud.

Three catalysts will define Chile’s trajectory in the coming weeks. First, the Banco Central de Chile’s next policy meeting will test whether the 2.8% inflation print translates into an accelerated cutting cycle — the market is pricing 50 basis points of cuts by mid-year, but the BCCh’s guidance toward 4.25% suggests the pace could be even faster if inflation continues to undershoot.

Second, copper’s direction remains the single most important variable for both the peso and the IPSA: the $13,300 all-time high is the ceiling, and a sustained break above it would likely push USD/CLP below 840 and reignite the equity rally.

Third, the new government’s first fiscal package will signal whether the market-friendly rhetoric translates into concrete policy — pension reform, mining royalty adjustments, and infrastructure spending are all on the table.

The risk calendar is not empty. Trump’s tariff agenda remains a wildcard for copper-exporting nations, and any escalation of US-China trade tensions would hit Chile disproportionately — China accounts for over 35% of Chilean copper exports.

The copper price correction analysis from Discovery Alert warns that the metal’s 50% year-on-year rally has created “stretched positioning” that is vulnerable to a liquidation event similar to the January 31 crash.

For the IPSA, the question is whether the 90% rally from 2023 lows has adequately priced the copper super-cycle and political transition — or whether the overbought weekly RSI is signaling that the market has gotten ahead of the fundamentals.

Key Facts

— Chile is the copper super-cycle’s purest equity expression — and the week’s price action captured both the opportunity and the risk.

— An IPSA at all-time highs with a weekly RSI of 79.88, a peso at multi-year highs with USD/CLP’s weekly RSI at 33.65, and inflation below the central bank’s target for the first time in five years — this is a market where everything is working simultaneously, which is precisely when corrections tend to be sharpest.

— The structural case remains compelling: copper’s supply deficit is real, the political transition is market-positive, and the rate-cutting cycle has room to run.

— But the IPSA’s 90% rally has priced in a lot of good news, and the 500-point intraweek reversal from the 11,693 high is a warning that the market is vulnerable to any disruption in the copper narrative.

— The 11,055 support level is the near-term line in the sand — hold it, and the correction is a healthy pause in a structural bull trend; break it, and the 10,481 year-end close becomes the next target.

— For the peso, the oversold technicals argue for a bounce, but fighting the copper trend has been a losing trade for two years running.