Chilean Peso Falls on Weak Economic Data



Chilean peso falls as copper production contracts

The Chilean peso depreciated against the US dollar on January 29, 2016, as reports indicated that copper production fell 5.5% on an annual basis in December 2015 against growth of 1.7% in November.

The Chilean economy is heavily dependent on the export of copper to other countries, and a drop in the metal’s production led to short positions in the Chilean peso, which has a high correlation with copper prices globally.

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Industrial and manufacturing production report falls

The Chilean peso was also trading negatively following a fall of 3.3% in industrial production on an annual basis in December 2015 compared to a rise of 0.6% in November.

On a similar note, manufacturing production contracted by 2.8% on an annual basis in December, a bigger fall than November’s fall of 0.2% and higher than consensus estimates of 1.7%.

Retail sales grow at a slower pace

Retail sales rose by 1.9% on an annual basis in December, a slower rise compared to growth of 5.5% in the previous month and forecast growth of 3.3%. On a monthly basis, however, retail sales fell by 1.5% in December against a rise of 4.0% in November, further weighing on the value of the Chilean peso.

On the other hand, the unemployment rate fell to 5.8% in December, lower in comparison to November’s 6.1%.

Impact on the market

The iShares MSCI Chile Capped ETF (ECH) rose by 3.5% on January 29, 2016, even as the Chilean peso was trading weaker. The iShares Latin America 40 ETF (ILF) followed a similar trajectory and rose by 5.5%.

Chile-based ADRs (American depositary receipts) were performing on a positive note. Enersis (ENI) was trading on a higher note, with a rise of 3.9% at the end of the day, while Empresa Nacional de Electricidad (EOC) rose by 3.2%. Finally, Banco de Chile (BCH) rose by 3.3% on January 29, 2016.


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