Chilean Peso Declines as European Concern Erodes Copper Price

Chile’s peso weakened for the first time in four days as investors shunned riskier, emerging-market assets including copper, the country’s biggest export.

The peso slid 0.3 percent to 480.05 per U.S. dollar from 478.86 on Feb. 3, retreating from a sixth straight weekly gain.

Copper for March delivery weakened as much as 1.9 percent on concern the European debt crisis may weaken economic growth in China, the biggest buyer of the metal. European stocks and the euro declined as Greek politicians fought to reach a deal on spending cuts and German Chancellor Angela Merkel warned them time was running out. The peso gained briefly after data showed Chilean economic growth exceeded estimates in December.

“This is external news because the local news points the other way,’ said Matias Madrid, chief economist at Banco Penta in Santiago. “It’s copper and the uncertainty because Greece hasn’t reached a deal yet. The activity data implies the central bank will hold rates, which should support the peso.”

Madrid doesn’t expect much reaction from the interest-rate swaps market to the activity data given that the likelihood of a central bank pause was already priced in, he said.

Offshore investors in the forwards market increased bets against the peso by $700 million to $4.9 billion on Feb. 2 from $4.2 billion on Feb. 1, 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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.