Why is the dollar over $ 800 despite the 10% AFP liquidation and the rise in copper?

Volatility is the word that most reflects the current state of the dollar price. And although with the withdrawal of 10% and copper closer to US $ 3 a pound, it was expected to stabilize around $ 750, none of that happened, but rather the opposite, which has been accentuated during the last days.

Specifically, on Monday the North American currency rose $ 6.26, closing at $ 804.79. In two days it accumulated an increase of $ 11.84, while in August it added a rise of $ 46.9.

Likewise, the Dollar Index, which measures a basket of six liquid currencies against the US currency, including the euro, accumulates a decrease of 0.57% in the eighth month to 92.83 points. And the Chilean peso was the currency that has depreciated the most in the world in August with a decrease of 5.82%.

In return, copper rose 1.53% on the day and closed at US $ 2.92. In the year it accumulates an increase of 4.6% and from the minimum that was on March 23 (US $ 2.09 per pound), it accumulates an increase of 39.5%.

What explains what is happening to the dollar? According to experts there are several factors and there are both internally and externally. “The Chilean peso has depreciated against the dollar in recent weeks, contrary to the trend shown by other currencies of comparable economies and considering the recent rise in copper prices,” says Bci economist Felipe Ruiz.

For the economist, one of the explanations at the local level points to the fact that “there are more purchases of dollars by foreign investors recently. Likewise, the Ministry of Finance has not returned to liquidate dollars in the exchange market in recent weeks, since it has indicated a liquidation of up to US $ 2,000 million in August “.

“The truth is that we have seen a somewhat unjustified rise in the last sessions for the exchange rate”, comments Sebastián Espinosa, market strategist at XTB Latam, who adds that “how much did the AFPs really sell abroad? The Central Bank intervened through debt purchase instruments, which motivated the AFPs to also liquidate local fixed income instruments ?: the AFPs did not sell as much as expected abroad and, apparently, the Central Bank did intervene by buying local fixed income instruments, seeking to stabilize the market. These responses seem to be those that have an exchange rate positioning today above $ 800, despite the fact that copper continues to be above US $ 2.90 per pound ”.

At the international level, Martina Ogaz, economist at EuroAmerica, points out that the “rise is closely related to the deterioration of the relationship between the US and China, where emerging economies are the most exposed to this tension.” In addition, the limited progress on phase 2 of the trade agreement between the two countries stands out.

Looking at the outlook, economists expect an exchange rate between $ 780- $ 800 in the short and medium term.

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