Chile’s stock market rose sharply in the late afternoon, while the peso struggled to find direction on Monday, after voters rejected a new constitution deemed progressive.
The Andean nation’s main stock index soared 6.37% at the best of times to an all-time high before trimming some gains, while the currency depreciated 0.3% after jumping more than 4% against the dollar after the Chileans voted on Sunday against a proposed new constitution, rejecting what would have been one of the world’s most progressive charters.
The referendum was also seen as an assessment of the government, which is facing high inflation, an economic slowdown and an internal security crisis, according to experts.
“Given that the overwhelming rejection of the new Constitution has weakened the government, it is possible that any new or reformed Constitution will address some of the more controversial aspects (for example, around property rights),” said Kimberley Sperrfechter, assistant emerging markets economist at Capital Economics.
“If the process is fast… we can see Chilean financial assets recover in a more sustained way. But if this is the start of a lengthy process and uncertainty drags on, Chilean assets are likely to come under renewed pressure.”
“The peso seems particularly vulnerable given Chile’s large current account deficit,” he added.
Source: CNN Brasil
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