Chilean Government’s Beating in Elections Gives Peso a Boostby
Peso outperforms emerging-market currencies after vote
Election may give boost to opposition presidential candidate
Traders betting on a change of ruling coalition next year in Chile are pouring into the peso.
The peso led gains today among major emerging market currencies, strengthening 1 percent to 659.53 per dollar at 1:24 p.m. in Santiago, the biggest move since Sept. 6. The amount traded was $754 million, below the yearly average of $1.1 billion, according to data from Datatec.
The opposition center-right coalition called Chile Vamos took a majority of mayoral seats in elections Sunday, 144 versus 141 for the ruling Nueva Mayoria coalition. Investors see the local results as auguring a victory for the opposition in next year’s presidential vote, which would usher in a more market-friendly government, according to Arturo Curtze, a trader at Interfactop Corredores de Bolsa SpA.
"A victory for the opposition would give a boost to the peso," Curtze said from Santiago. Even so, “the main drivers for all emerging market currencies will continue to be the Fed and the elections in the U.S."
Many voters believe Chilean President Michelle Bachelet has gone too far in her attempts to reform the free-market economic model imposed under Pinochet, as the economy posts the slowest sustained growth in more than 30 years. For another group, she hasn’t gone far enough, while many others were disenchanted after a series of financing scandals tarnished the reputation of parties across the political spectrum.