By Quasar Elizundia, Expert Research Strategist at Pepperstone
May 31, 2025:
“The Chilean peso weakened on Friday as trade uncertainty surrounding Donald Trump’s tariff threats weighed on investor sentiment. Investors fled to safe-haven assets, pressuring emerging market currencies like the peso amid renewed fears of a global slowdown.
Domestically, Chile’s industrial production rose 3.8% year-on-year in April, driven by a strong 10.1% expansion in the mining sector. Copper output increased due to better ore grades and higher processing volumes, reaffirming the sector’s key role in Chile’s external s. However, the manufacturing sector remained flat, and utilities contracted 1.0%, highlighting mixed momentum across industries.
Retail data pointed to resilience in household demand. The commercial activity index (IAC) rose 3.1% year-on-year, ed by robust gains in supermarket sales and a 13.6% surge in e-commerce. These figures suggest that private consumption continues to underpin growth, offering some to the peso.
Meanwhile, copper prices pulled back from recent highs as the International Copper Study Group raised its surplus forecast for Q1 2025 to 289,000 tonnes. Despite near-term tightness linked to US stockpiling ahead of potential tariffs, long-term oversupply concerns remain a headwind.
Looking ahead, investors will closely monitor Monday’s IMACEC economic activity data and Friday’s May inflation figures. Strong data could bolster the peso, while disappointing results or persistent external pressures may keep the currency under pressure.”