Chile Peso Falls as Production Slows, Greece Erodes Risk Demand

Chile’s peso snapped a three-day winning streak as concerns about Greek debt dented demand for emerging-market currencies and data showed domestic manufacturing grew less than analysts forecast in December.

The peso declined 0.7 percent to 487.96 per U.S. dollar as of 10:25 a.m. in Santiago from 484.55 on Jan. 27, which was the strongest closing level since September. The Bloomberg JPMorgan Latin American Currency Index declined 0.6 percent.

Stocks and commodities, including Chile’s biggest export, copper, fell on reports Greece’s Finance Minister blocked plans to allow the European Union to directly intervene in its budget planning. The peso extended losses today after the National Statistics Institute said Chile’s industrial output grew 0.5 percent in December, trailing the 1.2 percent median forecast of eight economists surveyed by Bloomberg.

“The scenario doesn’t look good at all,” said Andres de la Cerda, a money-markets trader at Bice Inversiones in Santiago. “Local data was bad, copper fell and the stocks and futures screens are all red. This is a reaction to international markets, but the local data doesn’t help at all.”

Offshore investors in the Chilean peso forwards market increased their short position in the currency to $4.4 billion on Jan. 26 from $4.2 billion on Jan. 25, 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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