The dollar registered a new historical maximum this Thursday, when it surpassed the $900 barrier, but this will not be a reason for the Central Bank to try to influence its price, since the rise has logical explanations, according to the organization’s view.

“There are good precedents to say that what has happened recently is linked to the fact that the U.S. Federal Reserve (Fed) was half asleep regarding inflation”, commented the vice-president of the Central Bank (CB), Pablo García, in the framework of a seminar of the Faculty of Economic and Administrative Sciences of the Universidad Austral de Chile (Uach).

The Metropolitan Region and the central and southern zones boosted the GDP in the first quarter of this year.

In the activity of launching the Quarterly Regional Gross Domestic Product, García referred for the second day to the exchange rate issue and stressed the idea that the rise of the dollar in Chile “responds to global phenomena. The dollar in the world is getting stronger (…) All the currencies in the world have tended to depreciate against the dollar”.

Dollar continues its escalation and surpasses the $900 barrier in the face of the copper plunge

Although the vice-president of the Central Bank added that internal factors have pushed the dollar’s price close to $150 or more, he emphasized that the increases from $815 are explained by the abrupt increase in rates by the Federal Reserve and the possible future increases that this organization and the market see in view of the advance of inflation.

“This is a much more aggressive rate hike scenario than I thought a month and a half ago, that is what is behind (the rise in the dollar),” said the economist.

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The Central Bank considered the option of applying an even greater increase in the interest rate at its last meeting.

In view of this scenario, García explained that the criteria for the Central Bank to intervene in the dollar market are not met. The vice-president of the Central Bank pointed out that the behavior of the dollar in Chile is normal in relation to the fact that it responds to the floating exchange rate of the Chilean peso, that these movements can be explained and that they are not yet considered “disruptive for the macroeconomy”.

In addition, he quoted the expression of the former president of the Central Bank, Vittorio Corbo, who said that “you have to be Tarzan to change the appreciation of the dollar” at this time.

Corbo dismisses CB intervention due to the rise of the dollar in Chile: “You have to be Tarzan to change its appreciation”.

However, García stated that the Central Bank’s action with its interest rate hikes has allowed counteracting part of the effect of the Fed’s actions.

“If we did not have the interest rate we have today and we were just realizing, like the Fed, that there is an inflationary problem, it is a good thing we realized it a year ago (…) The impact we would be experiencing would be much greater”, commented the economist when asked about a possible intervention in the exchange market.

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