Chile Offers Businesses Credit to Counter Peso's Region-Beating Rally

Chile plans to offer credit to small businesses with revenues in U.S. dollars in a bid to help offset the effects of the peso’s region-beating rally.

The government will offer $200 million in eight-year loans in dollars and pesos through Banco del Estado de Chile from Sept. 15, Finance Minister Felipe Larrain said today.

“We’re trying to give small businesses coverage from the exchange rate,” Larrain told reporters in Santiago. The government is “concerned about the issue and has been working on all types of solutions to be able to provide greater security for future revenue of small businesses,” he said.

Chile’s peso has appreciated 10 percent this quarter, outpacing the six other Latin American currencies tracked by Bloomberg, as the economy rebounds from February’s earthquake and the central bank raises borrowing costs. Larrain said a mixture of financing sources for the government’s $8.4 billion share of earthquake repairs is designed to minimize the effect on the exchange rate.

“But we can’t just focus on spending and financing and must work on company financing,” he said today.

The central bank last month raised its benchmark rate by a half-point for the third straight month, saying in a statement it would continue to remove monetary stimulus at a pace determined by economic conditions.

The economy expanded 6.5 percent in the second quarter from a year ago, the biggest increase in five years and more than the 6.2 percent median estimate of 12 economists in a Bloomberg survey.

The peso rose 0.4 percent to 495.44 per dollar at 12:05 p.m. New York time from 497.20 yesterday.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email