Given by strong dependence of Chile's economy on copper prices, I have negative outlook for CLP. Because I expect that in Mid-term (1-2 years) there will be ongoing correction of copper price from current high due to persistently soft cathode market, well-behaved mines, total absence of copper-related supply-side reform measures in China. As a result, another couple of years of mild oversupply (220-270ktpa of surplus) are expected. In this scenario we will see CLP depreciation vs USD.
The new president of Chile supports almost everything that markets can expect: more room for private activity, more fiscal responsibility, more growth, etc. To satisfy business community expectations Mr. Pinera understands that he has to move quickly on key reforms. Given by his experience and strong political and technical leadership, I expect Chile's economic upturn and corresponding CLP appreciation vs USD.
After presidential elections the new administration faces with new challenge - satisfying expectations of public and business. Surely, in situation when financial markets and corporations' decision makers are focused on the performance of the new political team and the environment, The new President realizes the importance of moving quickly to improve the economic situation. But I doubt that it would be easy for new government to find common ground with opposition and to get required majorities to pass theirs reforms. So my CLP's negative outlook reflects the political risk.
I expect further recovery of copper prices against the backdrop of market deficit from 2021, reflecting insufficient mine project investment together with robust demand. As one of the largest copper exporters in the world, Chile's economy will only benefit from this: support sustained economy growth and stimulation of the Central Bank to start normalization policy. I'll bet anything that we will see CLP strengthening.