Chile Peso Weakens 1.7% As Euro, Copper Fall After US Downgrade

SANTIAGO, Aug 08, 2011 (Dow Jones Commodities News via Comtex) -- The Chilean peso was trading 1.7% weaker versus the dollar early Monday, as the euro slipped against the greenback and as international copper prices slumped following Standard & Poor's downgrade of U.S. debt late Friday.

The peso was recently weaker at CLP473.00 to the dollar, versus Friday's close of CLP464.90, while trading in a range of CLP469.00 to CLP474.10.

As Chile's economy is highly dependent on exports and nearly a third of Chile's exports are bound for European ports, the peso often tracks the euro's movements against the dollar.

Early Monday, the euro fell against the dollar.

Because Chile is the world's premier copper producer, accounting for one third of global supply, the peso often takes trading cues from the industrial metal's international prices.

Spot copper prices in London fell 1.6% to $4.10002 a pound, according to Chilean state copper commission Cochilco, as the downgrade put a spotlight on the health of the global economy.

"We're seeing copper prices fall after the downgrade and that's weakening the peso...however, we're seeing the peso drop just under two percent because most market participants had already internalized a downgrade to the U.S.," said Sergio Tricio, studies head with Forex Chile.