Chilean Peso Under Pressure: Mixed Economic SignalsThe Chilean peso continues to face significant downward pressure against the US dollar, recording four consecutive sessions of losses. The local currency has lost the key support of the 200-day moving average, now trading near 960 pesos per dollar, reflecting a sharp decline in investor confidence toward the Chilean currency.
The latest weakness in the peso is mainly attributed to the release of mixed economic data for February 2025. The Industrial Production Index (IPI) showed a 3.6% year-over-year contraction, its sharpest drop since May 2023, driven particularly by a significant decline in the mining sector. Mining plunged 6.6%, directly affected by a 7.4% fall in metallic mining, especially copper—a key resource for Chilean exports and a major driver of national economic stability.
The manufacturing sector also posted negative results, falling 1.3% year-over-year. Particularly concerning was the 11.5% drop in beverage production, along with a notable contraction in the paper segment. This performance may signal weakened domestic demand, raising concerns about sustained economic growth in Chile.
Additionally, the electricity, gas, and water sector declined by 3.1%, mainly due to a drop in electricity generation, adding further uncertainty to the country's industrial and productive outlook.
However, some sectors are showing encouraging signs. Real estate sales rose by a notable 10.7%, indicating confidence in certain segments of durable goods consumption. Entertainment activities also rebounded by 7.5%, while transportation grew 6.6%, driven by a positive trend in air and port logistics. Likewise, retail trade showed strength in clothing, electronics, and wholesale machinery, partially offsetting the 1.4% decline in supermarket sales, a potential sign of uneven domestic demand across regions.
Attention now turns to tomorrow’s release of the Monthly Economic Activity Index (IMACEC).
This data will be crucial for assessing the short-term direction of the Chilean peso. A weak reading could further exacerbate pressure on the currency, while a positive surprise might offer a temporary reprieve for the peso.
Given this mixed scenario, the Chilean currency remains in a vulnerable position, shaped by uncertainty in key sectors of the economy, particularly mining.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
