Dollar hits $970 as Chile launches jobs plan amid external turbulence

The dollar brushed $970 on Monday for the first time in more than a year, and that figure neatly captures the dilemma Chile faces this session: a country trying to relaunch its economy from within while the outside world systematically complicates every one of its calculations.

The immediate trigger was geopolitical. According to The Wall Street Journal, President Trump rejected a conditional Iranian offer to reopen the Strait of Hormuz, through which 20% of the world's crude flows, and reportedly signaled to his advisors that strikes on Tehran could resume after November's midterm elections. Markets reacted with predictable nervousness: Brent crude touched US$108 per barrel during the morning before moderating to US$98.32 at the close, while the dollar index advanced 0.2% and copper retreated 1% in London to US$6.57 per pound. The IPSA fell for a third consecutive session and closed at six-week lows; adjusted for the peso's depreciation, the equity index has erased all its year-to-date gains. Chilean sovereign yields rose 10 basis points, tracking external rates.

For Chile, this external backdrop arrives at the worst possible moment. The central bank, through its representative at a luncheon hosted by Universidad del Desarrollo, warned that the environment has turned "more complex": the market is already pricing in another Federal Reserve rate hike this year and two more in 2027, above what was contemplated in the latest Monetary Policy Report. Those expectations pressure both the exchange rate and domestic inflation. Economists polled project a September CPI print between 0.4% and 0.6%, which would push the annual variation to between 4.2% and 4.3%. Ignacio Martínez, of Banco Itaú, estimates that gasoline prices will have accumulated a 27% rise since late February, and diesel 48% — pressures that pass directly into an economy where truckers on Monday already delivered an ultimatum to the government: 48 hours to respond to their demands, which include an automatic mechanism to pass fuel prices through to transport contracts and the reactivation of MEPCO with parameters that predate the current administration.

It was against this backdrop of external pressure, sticky inflation, and retreating markets that President José Antonio Kast chose today to launch his employment plan "Chile Despega con Más Pega," which will mobilize $1.3 trillion — the equivalent of US$1.35 billion — with the declared aim of creating more than 100,000 jobs and reducing unemployment to 6.5% before the end of his term. The announcement came hours before INE publishes on Wednesday the unemployment rate for the quarter ending in August, which analysts expect will again exceed 9%, extending a streak of 43 consecutive months above 8%. GDP has contracted 0.4% between January and July, and the outlook for the full year points to growth below 1%.

The plan rests on four pillars: accelerating public investment in infrastructure, housing, and quick-execution works starting in the fourth quarter; expanding hiring subsidies — the program launched in July already has 66,000 applications against an initial cap of 25,000, which will be raised to 100,000; capitalizing Fogape with up to $300 billion to generate as much as $4.05 trillion in guarantees; and local execution monitored by unemployment criteria. Political reception was broad-based, but technically conditional. CPC president Susana Jiménez welcomed the direction but asked to aim for "much more" than 100,000 jobs. Economists including María José Abud, of Horizontal, and Claudia Martínez, of the UC Institute of Economics, agreed that the four-month subsidy is insufficient in duration and scale for a crisis of this magnitude. The analyst consensus is that the package could reduce the unemployment rate by up to one percentage point at steady state, but only if public investment is executed with unusual speed — historically not a strength of the Chilean state.

The absence of Finance Minister Jorge Quiroz from the launch event did not go unnoticed. The official explanation — that he was finalizing the 2027 Budget — reveals the underlying tension: La Moneda is finalizing a Budget Law whose spending would grow by only slightly more than 1%, a figure recalculated upward in recent days from an initial range of between 0% and 1%. The challenge is geometric: stimulate aggregate demand to reduce unemployment without weakening a fiscal position already stretched by the mega-reform, whose costs are relatively certain but whose offset depends on future growth that is not. Public debt could exceed the prudent 45%-of-GDP threshold from 2029, according to analyses published today.

On the mining front, unions at Minera Centinela — an Antofagasta Minerals subsidiary — approved a strike with 98.73% support and 100% participation of eligible members, in a vote that reflects wage tensions the sector faces at a moment when copper is already retreating under external pressure. Simultaneously, Andes Iron formally withdrew its appeals before the Supreme Court in the Dominga case, betting on resolving the conflict through administrative channels and unblocking invalidation requests against the Committee of Ministers' resolution that rejected the project twelve years of litigation ago. The move represents a significant strategy shift for an iron and copper project in the Coquimbo Region whose future remains uncertain.

On the sovereign debt front, the Finance Ministry on Monday closed its first Swiss franc issuance: two bonds totaling CHF 380 million, equivalent to US$458 million, in 5- and 10-year tranches, adding to prior placements in dollars, euros, and now a new currency, in what capital markets coordinator Eugenio Symon described as part of the funding diversification strategy. The operation is technically positive, but the rising sovereign yields recorded in the same session illustrate how much the cost of that debt depends on what happens in Tehran, Washington, and London.

What will define the week is the sequence of hard data: INE's unemployment rate on Wednesday and the central bank's activity figures on Thursday. If both confirm the expected deterioration, pressure on the government to go beyond the announced plan will intensify, and the fiscal discussion around the 2027 Budget — which already has the UDI caucus proposing to eliminate INDH's budget as a political pressure tool — will become even more tense. Former Finance Minister Mario Marcel will appear before deputies in a week that could also see the MK4 reform advance to a general vote on October 1, adding another variable to a political-economic scenario that for the first time in many months combines social urgency, market pressure, and the background noise of a war in the Middle East.

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