(Bloomberg) Andean currencies were strengthening due to a greater global appetite for risk and most emerging market currencies were advancing against the dollar, while stock indices were pointing up in the United States and Europe. Chile's Chamber swap rates extended their increases as Treasury yields rise in response to a steeper Fed adjustment cycle.
The Colombian peso appreciated 0.2% after its low performance this week, with a key level of 3,730 to the dollar, attracted bears.
The IBR curve has generally increased between 6 and 11 basis points as fixed-income assets suffer from the prospect that global inflation will remain under pressure, requiring longer monetary cycles.
The Banco de la República will meet on March 31 and traders and analysts are betting that it will accelerate the pace of monetary tightening with a rate increase of 150 basis points. Until then, investors are prepared to follow global movements, while monitoring the war in Ukraine.
The Chilean peso was up 0.3% and the Chamber's swap curve had risen between 7 and 10 basis points as traders await the central bank's decision next week.
The Central Bank of Chile is also expected to make another sharp increase in its benchmark rate after raising it by one and a half percentage points at the last meeting.
The currency is on track to retest the year-to-date high of 783.49 pesos to the dollar, last reached in late February, when it attracted a significant amount of dollar buyers. If it fails to pass the level, the currency would be left without any reference level up to about 771 pesos per dollar.
Peruvian sol traders are targeting the level of 3.6680 per dollar, although the weak performance of copper (down 0.6% in London) may prevent a strong appreciation.
The president of the Central Reserve Bank of Peru, Julia Velarde, said she is not sure whether inflation will return to the target in the first half of 2023. Lima's CPI stood at 6.15% in February compared to the bank's target of 1%-3%.
(Some of the information comes from FX traders familiar with the transactions who asked not to be identified because they are not allowed to speak publicly.)
Original Note:
CLP, COP Rise With Peers as Swap Rates Climb: Inside Andes
Davison Santana is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended to be investment advice.
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