Chile Bucks FX Volatility Collapse as Traders Left Guessing
- Unstable easing cycle pace added to peso’s implied volatility
- Chilean peso is worst performing currency in world this year
Central bank headquarters in Santiago de Chile.
Photographer: Cristobal Olivares/BloombergThis article is for subscribers only.
Currency swings are tumbling across the globe. In Chile, traders say policymakers are keeping it volatile.
Swings in the $7.5 trillion-a-day global foreign exchange market have abated amid the steady rise of algorithmic traders and options strategies. The jolts have eased even in Latin America, home to what at times feels like perennial political turmoil. But in Chile, which appeared to be putting years of upheaval behind it, the peso’s implied one-month volatility hasn’t been this high compared with Brazil since the threat of radical constitutional change rattled investors in 2021 and 2022.