Chile Peso Caps Fifth Weekly Gain as Copper Buoys Trade Outlook
Chile’s peso rose, extending its fifth consecutive weekly gain, after the country’s biggest export, copper, touched its highest price in four months.
The currency strengthened 0.4 percent to 484.55 per U.S. dollar, bringing its increase this week to 1.6 percent. The peso closed below 485 for the first time since September. The Bloomberg JPMorgan Latin American Currency Index gained 0.3 percent today and is up 1.2 percent this week.
Copper for March delivery rose as much as 1 percent today in New York to $3.939 a pound, the highest since Sept. 20, before reversing course and sliding 0.4 percent after Commerce Department data showed the U.S. economy grew less than analysts forecast in the fourth quarter.
“The trend is for asset prices to rise and the appreciative pressure on the peso will continue,” said Eugenio Cortes, head of currency forwards at EuroAmerica Corredores de Bolsa. “Any stumble in the market is just an opportunity to sell dollars, as you can see today. The main reason for the peso’s gain has been the sharp rise in copper, but it will take a series of negative events for the trend to change.”
Chile is the world’s biggest producer of copper and the metal, used in cars and homes, accounts for half its exports. Copper’s decline today reduced its weekly gain to 3.8 percent.
Offshore investors in the Chilean peso forwards market reduced their short position in the currency to $4.2 billion on Jan. 25, the lowest since Nov. 3 according to central bank data.
To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
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