The Rise of the North American Currency: Exploring the Global Phenomena and its Implications

In recent weeks, the dollar price has experienced an increase, reaching a value of $919,50 the unit, a new maximum in the year.

During the last few days, the president of the Central Bank, Rossana Costaexplained that this was clearly due to global phenomenaso there would be short-term effects.

“What we are seeing today is that the exchange rate is responding to global factors“, he explained at an event organized by the CPC Biobío in Concepción, Biobío Region, and added that “l(inflation) expectations today are at 3% and therefore we do not see the impact on the two-year goal changing with respect to the scenario.”

For his part, the Minister of Finance, Mario Marceldeclared last Wednesday on T13 Radio that the rise of the dollar “is a phenomenon that It will remain and eventually it will reverse. “It has to do with factors that occur outside of Chile.”

Furthermore, he agreed with Costa that “when the dollar increases due to external factors, its impact on inflation is lower than when it is due to local phenomena.”

What happens with the price of fuel?

Last Thursday, the fuel price They suffered an increase that exceeded $30 in the case of 93 and 97 gasoline, in addition to liquefied gas. Diesel, meanwhile, increased by $15.9 per liter.

The economist from the Pontifical Catholic University of Valparaíso (PUCV), Rodrigo Valdesexplained that this is mainly due to the rise of the dollar.

“The dollar has reached historical levels above 900 pesos, that It affects us directly because Chile depends on foreign producers, mainly from Brazil, Colombia and Ecuador, among many others, and logically, when crude oil is imported and denominated in dollars, it puts pressure on the price of gasoline to rise,” he said, in statements collected by Mediabanco.

What do I do with the credit card?

With the rise of the dollar, experts recommend that if you have debt in your Credit cards With North American currency, you must pay whenever you can.

“Any operation we carry out to postpone the payment of the credit card in dollars, usually automatically converted into pesos, which implies assume a high dollar, in addition to the financial costs associated with postponementwhich also tend to be high,” explained Sergio Tricio, CEO of the financial planning fintech, Patrimore, to Financial Journal.

Tricio aimed for small payments before the card cut-off date. “That is a good alternative. When it comes to paying the card in dollars, it is natural that people want leverage the best possible price, but it is something very difficult to do. For the same reason, It is a good alternative to pay the dollar quota little by littletaking advantage of the momentary drops that may occur,” he indicated.

To the same medium, Juan Carlos Contrerasan academic in Commercial Engineering at the Universidad de Las Américas, Concepción campus, also stated that, in these cases, “The suggestion is to pay during the month whenever you canin this way the cost of the purchase made in dollars will not increase due to the exchange rate.”

“International credit cards usually have higher interest rates than national ones.Therefore, it is not advisable to defer payments or renegotiate the debt in dollars through these cards, since you will end up paying a much larger amount,” he warned.

For this reason, he recommended that “in this case The recommendation is to transfer said debt to a national credit card (pesos)whose interest rates are usually lower.”

The projection for the last quarter

With the rise of the dollar, now the question is what will happen in the last quarter of the year. As detailed Bloombergseveral financial entities point out that the currency it would be close to $850 between October and December.

On average, a price of $862but it is not ruled out that it reaches a minimum of $820 and a maximum of $920.