Andean Equities Climb, FX Diverges

Market Snapshot

Asset	Level	Change
MSCI Colombia	9.02	+0.00%
MSCI Chile	39.79	+2.42%
MSCI Peru	81.46	+1.74%
USD/COP	3,695.78	+1.57%
USD/CLP	908.69	-0.87%
USD/PEN	3.42	+1.17%
Copper	5.76	-0.55%
Gold	5,005.30	+0.23%
Brent Crude	103.06	+2.84%
Bitcoin	73,785.67	-1.44%
Colombia 10Y Govt Yield	-	-
Chile Short-term Rate	4.50%	-3.02%

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
No events available

Andean equities advanced amid commodity fluctuations, with MSCI Chile up 2.42% and MSCI Peru rising 1.74%, while MSCI Colombia remained unchanged at 0.00%.
FX markets varied, as USD/COP increased 1.57% to 3,695.78 and USD/PEN rose 1.17% to 3.42, but USD/CLP declined 0.87% to 908.69.
Commodities exhibited gains in oil and gold, with Brent crude advancing 2.84% to 103.06 and gold increasing 0.23% to 5,005.30, countering a 0.55% drop in copper to 5.76.

Yesterday's Recap

Andean markets demonstrated strength on March 16 despite an empty economic calendar, with equities in Chile and Peru posting notable gains driven by commodity movements. The MSCI Chile index rose 2.42% to 39.79, reflecting positive sentiment in mining sectors even as copper prices fell 0.55% to 5.76, which could strain export earnings. MSCI Peru gained 1.74% to 81.46, supported by gold's 0.23% uptick to 5,005.30, helping mitigate impacts from ongoing mining labor disputes.

MSCI Colombia stayed flat at 9.02 with no percentage change, as Brent crude's 2.84% increase to 103.06 provided backing for oil-related revenues. In foreign exchange, the Colombian peso depreciated with USD/COP up 1.57% to 3,695.78, influenced by global energy volatility. Conversely, the Chilean peso appreciated, with USD/CLP down 0.87% to 908.69, possibly aided by equity market inflows.

The Peruvian sol weakened, as USD/PEN climbed 1.17% to 3.42, tied to uncertainties in gold production and royalty discussions. Bitcoin declined 1.44% to 73,785.67, exerting limited influence on regional assets. Chile's short-term rate decreased 3.02% to 4.50%, indicating potential monetary easing amid subdued inflation signals.

The Day Ahead

March 18 brings another quiet day for Andean economies, with no significant data releases or events on the calendar for Colombia, Chile, or Peru. Markets may focus on digesting recent commodity price shifts, including Brent crude at 103.06, which supports Colombia's budget through oil exports. In Chile, developments in copper and related sectors could draw attention, given the metal's price at 5.76 and its role in trade balances.

Peru's outlook may center on gold market stability at 5,005.30, alongside any progress in resolving mining disruptions. External factors, such as ongoing Middle East tensions affecting global oil, could introduce volatility to Andean FX pairs. Trading volumes are expected to remain subdued absent major global surprises.

Other Economic Notes

Andean economies continue to navigate commodity dependence, with Chile and Peru exposed to copper price movements at 5.76, potentially affecting fiscal positions. Colombia gains from Brent crude's strength at 103.06, aiding efforts to manage deficits through energy revenues. (cont...)

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Other Economic Notes (continued)

Inflation dynamics differ across the region, with Colombia facing elevated pressures that may delay policy shifts, while Chile shows signs of cooling and Peru maintains relative balance. Political elements, such as debates over mining royalties in Peru and export strategies in Chile, contribute to FX uncertainties in COP, CLP, and PEN. Broader themes include diversification needs, with gold at 5,005.30 offering Peru some resilience against metal market downturns.

Global Macro News

Middle East tensions drove Brent crude up 2.84% to 103.06, benefiting Colombia's oil sector but increasing costs for importers like Chile and Peru. Copper's 0.55% decline to 5.76 signals weaker demand from China, posing challenges for Chile's budget surplus and Peru's mining production. Gold rose 0.23% to 5,005.30, providing a safe-haven boost for Peru amid emerging market risks.

The ECB deposit rate stood at 2.00% as of March 16, while Eurozone unemployment was 6.70% as of January 2023, indicating steady European conditions that may sustain demand for Andean exports. In Asia, the Philippine peso hit a record low near 60 per dollar on March 16, pressured by oil shocks and war fears, as reported by sources including MSN, GMA Network, and PhilStar, with central bank intervention noted to prevent further slides. This EM currency weakness could influence Andean pairs like COP and PEN.

Australian copper explorations, such as True North Copper's efforts in Queensland and Litchfield Minerals' drilling in the Northern Territory, underscore global competition for Chile and Peru. Additional news highlighted Rio Tinto and BHP's legal progress for a U.S. copper mine in Arizona, potentially impacting supply dynamics.

Bitcoin fell 1.44% to 73,785.67, contributing to cryptocurrency fluctuations with negligible direct effects on Andean markets. US dollar firmness, fueled by Federal Reserve signals, persists in pressuring regional currencies, highlighting CLP's relative outperformance against COP and PEN depreciations.

Andean Central Banks Watch

Central banks in the Andes exhibited varied approaches. Colombia's BanRep maintained a cautious stance to address persistent inflation, supporting policy credibility as USD/COP rose 1.57% to 3,695.78. Chile's BCCh, having pursued rate reductions, saw its short-term rate fall 3.02% to 4.50%, aligned with easing inflation and copper challenges at 5.76 alongside lithium prospects.

Peru's BCRP focused on stability, using interventions to temper USD/PEN's 1.17% gain to 3.42 while leveraging gold reserves at 5,005.30. Divergences in rate paths continue, with Colombia expected to hold longer than Chile's easing and Peru's neutral position. Inflation frameworks remain effective, though Colombia contends with fiscal strains.

(cont...)

Continuation

Andean Central Banks Watch (continued)

Reserve strategies are in play, especially in Peru to counter commodity volatility, with no new interventions detailed but close watch on oil and metals guiding actions.

Andeans Macro Daily(Beta Mode)