(Bloomberg) Andean currencies showed little variation amid volatility in international markets as oil prices fell, the dollar strengthened and US Treasury bonds reversed their intraday direction. Peruvian markets were ignoring concerns about the vote on President Pedro Castillo's impeachment.
The Peruvian sun strengthened by 0.2% as its president faces the second overthrow attempt since taking office less than a year ago.
Operators have been optimistic about political problems, as the opposition is not expected to gather the votes needed to overthrow the president. At least 87 of the 130 legislators would have to vote against it for the impeachment motion to succeed.
Congress is expected to vote on Monday, but it has not been specified at what time.
The Chilean peso showed little change, immune to the sharp depreciation observed in pairs of emerging markets such as the Mexican peso and the Brazilian real, which fell by 1.1% during the session.
The breakdown of the dollar's key support level just below 800 pesos per dollar paved the way for further appreciation of the currency and gained momentum amid the absence of any significant technical level to the 763 pesos per dollar area.
Chile's swap curve was down 3-7 basis points, in line with US Treasury yields Rates in the world's largest economy reversed the previous movement after 5-year rates peaked at 2.67% in the session.
Chamber swaps are cutting the rally that drove local yields up by 34 to 45 basis points last week.
Traders are adjusting positions ahead of the Chilean Central Bank decision on Tuesday, when officials are expected to show a very restrictive stance amid the fight against inflation.
Investors and analysts are divided over whether officials will keep pace with another rate hike of 150 basis points or whether they will accelerate it to 200 basis points.
Inflation in Chile is 7.8%, compared to the central bank's target of between 2% and 4%.
The Colombian peso appreciated 0.3% despite the 8% drop in oil amid the worsening resurgence of the virus in China and reports that the US is considering another release of oil from its emergency reserves. The positive perception in the local market comes after several underperforming sessions over the past week, which traders attributed to specific exits.
The currency remains confined between the dollar support close to 3,785 to the dollar and its 200-day moving average at 3,860 to the dollar.
(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:
Peruvian Sol Rises Ahead of Impeachment Vote: 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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