Chile peso hits 19-month low as copper drops, US rate outlook weighs

Latin American currencies saw varying results on Friday, with Chile's peso hitting its weakest level in 19 months. Investors weighed the potential trajectory of US interest rates alongside regional economic indicators and central bank cues. The Chilean peso slipped 0.4% against the dollar, reaching its lowest point since April 2025.

The nation's bonds, due in 2042 and 2054, both fell about 1 cent, according to Tradeweb data. Copper, Chile's main export, slumped to a near four-month low, and was on track for a fifth consecutive weekly decline. This drop followed a dip in investor sentiment following the resignation of Nvidia CEO Jensen Huang on Thursday, raising doubts about the pace of spending on data-center infrastructure.

MSCI's Latin American currency index stayed largely flat on the day but was down for the third straight week. The regional equity index rose 0.5%, leaving the week as a stalemate. The dollar declined slightly on Friday after peaking at a 19-month high the day before. A stronger-than-expected US inflation report bolstered the view that the Federal Reserve might raise interest rates again.

Higher yields usually attract capital into dollar-based assets, exerting pressure on currencies of emerging markets. In Mexico, investors dissected mixed signals from Washington regarding trade. Treasury Secretary Scott Bessent indicated expectation of trade agreements with both Mexico and Canada, following a day when President Donald Trump had threatened to double tariffs on Mexico over a migrant caravan.

The Mexican peso stayed steady, while the main stock index slipped 0.6%, slipping after achieving a record high the session before.