The dollar plummets against the Chilean peso after the election results

The dollar experienced a decline of more than 30 pesos in its price against the Chilean currency in the first transactions this Monday after the opening of the exchange market, after this Sunday the far-right José Antonio Kast, champion of a liberal economy, imposed in the first round of the presidential elections.

The peso opened the day at just over 800 units per dollar, compared to more than 830 for which it was trading last Friday, which is the largest decline in the US currency since the Great Recession of 2008, according to local media.

The head of studies of the Capitaria trading company, Ricardo Bustamante, told the local newspaper Emol that the elections “have generated important changes in expectations”, Above all due to the fact that the first majority of votes (27.94%) was achieved by Kast, which the markets would be seeing in a favorable light.

In addition, it is valued that the liberal economist Franco Parisi achieved significant support of almost 13%, since despite not entering the second round, his support becomes key for the election of the president in the ballot.

Meanwhile, the candidate who will face the second round after reaping 25.69% of the votes, Gabriel Boric, is presented as the standard bearer of a leftist formation that has the support of the Communist Party.

“The high vote of more conservative candidates has supported a favorable scenario for investors, considering that they have more pro-market projects and economic policies would reactivate investment and growth in the country”Said Bustamante.

For his part, the chief economist of BICE Inversiones, Marco Correa, told the newspaper La Tercera that Kast’s economic program “is perceived to be more market-friendly than Boric’s, which would favor assets partially”.

Kast and Boric will contest the presidency of the country in the second round of the elections, scheduled for December 19.

Both are united by being representatives of political forces founded a few years ago and by collecting the vote disenchanted with the current institutional framework, but their government programs differ completely in their political, economic and social nature.

Kast advocates minimizing the role of the State, reducing public spending, reducing taxes and promoting the free market, while Boric projects a transition to a new productive matrix, an increase in taxes and the strengthening of the role of the State to offer a model solidarity pensions and a universal health system.

Influence

In addition to the presidential elections, Chile this Sunday elected 27 new senators to renew an Upper House that from 2022 will have 50 seats; and the total of 155 deputies, reconfiguring the correlation of forces within the National Congress.

This choice also had an influence on the exchange market, as pointed out by the director of the Business School of the Universidad Mayor, Francisco Castañeda.

“The right regained power in Parliament with respect to senators and deputies, so any change in tax policies, for example, will have to need consensus”Castañeda pointed out.

“This makes the dollar fall and gives the markets more confidence in the future of Chile, at least in the short term.”Added the expert.