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Chilean Peso Strengthens to Three-Month High as Price of Copper Advances
Jul 27,2011 10:02CST
industry news
Source:SMM
Chile's peso rose to the strongest in three years as copper prices surged.

Jul. 27 (Bloomberg) –Chile's peso rose to the strongest in three years as copper prices surged and the dollar fell against all of its most-traded peers after U.S. politicians struggled to agree on raising the U.S. debt ceiling and reducing the deficit.

The peso advanced 1.1 percent to 457.68 per U.S. dollar at 2:34 p.m. New York time, the strongest since April 2008, from 462.57 yesterday.

"The fiscal situation in the United States has made the dollar depreciate with respect to other currencies, which is making commodities more expensive and benefiting the Chilean peso," Cristobal Doberti, an economist at Bice Inversiones, said in a telephone interview from Santiago. "That's why we are seeing the peso break the 460 barrier, and it could reach all the way to 455 this week if the crisis in the U.S. persists."

Chile's peso had the biggest increase today of the six Latin American currencies tracked by Bloomberg.

"You have the peso outperforming other currencies because of copper's strong performance," said Dirk Willer, head of Latin American local markets strategy at Citigroup Inc., in a telephone interview from New York.

Copper, which accounts for half of Chile's exports, climbed 1.6 percent on the New York Mercantile Exchange, its biggest gain in almost three weeks. Workers at Chile's Escondida copper mine, the world's biggest producer of the metal, continued to strike for the fifth day today. The walkout has decreased production by 12,000 metric tons so far and fueled speculation supply will fall short of demand.

Chile's one-year interest-rate swap rate, which reflects traders' views of future rates, fell eight basis points, or 0.08 percentage point, to 5.55 percent as of 3:59 p.m. in New York.

 

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