EM FI/FX Strategy Chile: Is the peso broken?

Research evidence excerpt

EM FI/FX Strategy Chile: Is the peso broken?

Global Research

7 July 2026ab

EM FI/FX Strategy Emerging Markets

Latin AmericaChile: Is the peso broken?

Roque Montero

Strategist

Overlooked macro risks come home to roost roque.montero@ubs.com

+1-203-719 2112

Despite what looked like a textbook bullish setup—record copper prices, a pickup in

investment, a more market-friendly political backdrop and, more recently, relief from Manik Narain

Strategistlower oil prices—the peso has underperformed most EM currencies this year, with local

manik.narain@ubs.com

equities back near pre-election levels. We recommended selling CLP as one of our top +44-20-7568 3635

trade ideas for 2026, arguing that copper alone would not be enough to anchor the

peso given Chile's soft growth backdrop, an investment cycle that was narrower and less Rafael De La Fuente

Economist

growth-supportive than headline figures suggested, and stretched growth expectations.

rafael.delafuente@ubs.com

While these risks were largely overlooked as electoral optimism set in late last year, they +1-203-719 7127

are increasingly coming into focus.

Andrea Casaverde

In this context, we stay short CLP, a view we are expressing via COP longs over the andrea.casaverde@ubs.com

summer, targeting CLPCOP ~3.5k (USDCLP 950–960), while trailing stops after +1-203-713-2515

exceeding our original target. Two near-term catalysts for CLP weakness are a dovish CB

pivot at the July meeting and a faster pace of USD buying following the Aug review of

the reserve purchase program. Positioning and valuations do not look stretched, with

carry among the lowest in EM and below equilibrium levels. More broadly, short CLP also

offers a hedge against a reversal in AI-driven copper optimism. The balance of risks for