Most analysts predict stronger growth in Chile this year. Coutino sees potential for Chile to post a 5.2 percent GDP reading in 2007 vs. a 4.3 percent figure in 2006, while HSBC’s Wardle forecasts growth at 4.8 percent.
Ideaglobal’s Delgado says looser monetary policy is a major factor that will open the door for stronger growth. Chile lowered its official reference rate from 5.25 to 5.00 percent in early January.
For those interested in trading the Chilean peso (CLP), it pays to stay on top of the trend in copper prices, as Chile is the world’s main copper producer and the metal accounts for approximately 75 percent of the country’s export revenues. Although copper rallied stunningly from 2004 through mid 2006, the recent sell-off has taken prices from $4.16 a pound in May 2006 to around $2.66 a pound in late-January 2007. Nonetheless, the current price level is still extremely high from a long-term historical perspective.
Strong world demand for copper would continue to underpin prospects for the Chilean peso throughout 2007; the U.S. dollar/Chilean peso rate (USD/CLP) was trading around 540 in late January. Coutino called for a modest 1- to 2-percent appreciation in the pair this year (i.e., a weakening CLP vs. the USD). However, more weakness in copper prices could further weigh on the currency outlook.
Subscribe to:
Post Comments (Atom)
Post a Comment