With Chile’s summer fruit season just starting, the head of an industry association has raised concerns about an exchange rate that is now “just below the value that allows for normal profitability” in the sector.
In a release, Chilean Association of Fruit Exporters (ASOEX) president Ronald Bown said he was alert but cautious about the situation.
At the time of writing yesterday one U.S. dollar could buy 607 Chilean pesos, representing a two-year low for the dollar compared to the Chilean currency.
The dollar was also quite low against the Chilean peso (US$1: CLP619) in August but there was a resurgence until it hit CLP656 on Dec. 12. The dollar then started to fall against the Chilean peso and has continued to drop since the election of Sebastian Piñera on Dec. 17 amidst an air of positivity about the country’s economic outlook.
In a release, Bown attributed the peso’s strength to three factors: the dollar index calculated by the Federal Reserve in the U.S., a surge in the price of copper which is a major driver of the Chilean economy, and expectations or “perhaps an excess of optimistic expectations”.
“The fruit export industry continues to be attentive to exchange rate volatility and is awaiting what will happen at the next meeting of the Central Bank Council and what is decided with respect to the fall in the current monetary policy rate of 2.5% to 2%, as has been shown in the minutes of the Council, which is the vision of some members,” Bown said.