Chilean peso likely peaks in coming months

Since early 2013, the peso weakened from 475 to 700. The valuation models show that above 700, the currency has landed overshooting territory. 
This result comes through an empirical exercise in which half-lives are estimated with historical valuations from the POLAR model. The Chilean peso comes up with the shortest period of undervaluation remaining within the LatAm currencies. 

"The medium term outlook therefore incorporates a peak in the coming months and appreciation thereafter. The peso is due to bottom sometime around January 2016. Going into the first half of next year, the beginning of a tightening cycle may help anchor the peso", says RBC Capital markets. 

Meanwhile, peso appreciation might be limited because China investment spending growth will continue to deteriorate. USD/CNY drifting higher towards 7.00 may effectively floor USD/CLP at 670.