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Depreciation of the Chilean Peso

The United States dollar (USD) has been rising at a higher rate than the Chilean Peso (CLP), and as a result, the prices of property in Chile have decreased by over 30%. This is the perfect time to invest and purchase your very own ranch in the heart of Patagonia!

One of the greatest external factors effecting the Chilean peso is the surge in US currency and reduction in China’s growth. It is not so much that the peso is losing value, but that the dollar has been increasing in value. After the increase in the interest rate this gap has widened even more (Iván Cachanosky).

The dollar started rising in 2014 when $1 USD was equivalent to $500 CLP. In the past couple of months, the CLP has depreciated to a present value of $700 CLP to $1 USD.

Property in Chile | Copper Futures

Domestically, President Bachelet has created multiple economic reforms to boost the economy. These changes have generated a bit of uncertainty and impeded various foreign investment into Chile. This devaluation is further compounded by the overall decrease in the demand for copper, Chile’s number one export. Then, this decline in demand was amplified by the reduction in Chinese raw material imports. The correlation between the CLP, copper, and Chinese demand is the root cause of this deflation (David Meyer).

These factors that are leading to the devaluation of the CLP will inevitably subside. The uncertainty created by Bachelet’s reforms will soon diminish, and the price for copper will recover. Despite the depreciation, this is one of the best times to invest in property in Chile.

Patagonia Sur has created multiple other safeguards to make these investments even more lucrative. As Felipe Zeggers Waissbluth put it, “Patagonia Sur´s unique ownership model adds an extra layer of security to a property purchase. At the 8,000-acre Valle California Reserve near Palena, Chile, you can choose from 25 parcels to build your dream retreat,  while also enjoying shared ownership of 7,500 acres of stunning Patagonian forests, pampas, and hidden mountain lakes. An experienced management team oversees Valle California, and there are full-time staff on-site that care for the property. International property ownership could truly never be easier.”

This is the best time to invest in Chile, prices are low and the outlook for future years is a resurgence in the CLP.

Sources:

Ivan Cachanosky: https://panampost.com/ivan-cachanosky/2015/09/07/why-the-chilean-peso-is-tanking/

David Meyer: http://marketrealist.com/2015/09/high-correlation-chilean-peso-copper-prices/

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