After Powell's words softened expectations for a rate hike, the exchange rate lost $ 6 during the day.
Yesterday, the president of the US Federal Reserve gave a speech that stifled expectations of growth in market rates and immediately distracted from the dollar at the global level. But, as happened yesterday after the close of the stock market, the local exchange rate reacted today.
Upon completion of day operations, the dollar in Chile was $ 669.5, which represents a sharp drop of $ 6 compared with yesterday’s price.
The key, according to market agents, is in the comments made yesterday by Fed Chairman Jerome Powell. In a speech in which investors were waiting, the authorities said that the interest rate was close to its neutral level, which gave lights that the central US center could reverse the process of normalizing monetary policy.
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This has given rise to a boom in emerging currencies, which at this point are rising in blocking against the dollar, with some exceptions.
It should be recalled that this class of assets was in trouble during 2018 due to the fact that in the first months of the year the Fed showed signs of a more aggressive tariff schedule than what was planned in 2017.
For its part, world dollar prices, measured by the dollar index, which contrasts with the basket of currencies, remained virtually unchanged after yesterday’s drop with Powell’s words.
Of course, more volatility is expected in the short term, given that investors are still waiting for new developments in the trade war between China and the United States. “The market is cautious before the G-20 meeting, especially after Donald Trump commented that there is still a lot in the fight against tariffs with China,” said Ricardo Bustamante, head of the trade research department at Capitaria.
In this line, the analyst argues that after the event, which will take place on Saturday in Buenos Aires, there may be more clarity regarding the forecast of the foreign exchange market.