Charter Said to Plan Time Warner Cable Bid Under $140/Share
Chilean Peso Weakens as Copper Declines on European Debt Concern
Chile’s peso headed to its longest losing streak in two months on declining copper prices and calls for the central bank to weaken the currency.
The peso weakened 0.5 percent to 482.15 per U.S. dollar as of 10:30 a.m. in Santiago, poised for its third day of declines, the longest stretch since mid-December. The Bloomberg JPMorgan Latin American Currency Index fell 0.2 percent today.
Copper slid for a third day, pushed lower today after Moody’s Investors Service cut ratings on six European countries including Italy. Euro area finance ministers meet tomorrow in Brussels to decide on a rescue package for Greece.
“What we’re seeing is technical and triggered to an extent by the uncertainty around the euro area meeting tomorrow,” said Cristian Donoso, a currency trader at Banchile Corredores de Bolsa SA in Santiago. “There is a drought of corporate flows, so it’s basically bank trading and some offshore actors.”
The peso depreciated through a key technical level yesterday after copper, which makes up more than half of Chile’s exports, fell and Deputy Finance Minister Julio Dittborn said the central bank should consider intervening to weaken the currency. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in asset prices.
“The peso yesterday closed weaker than the resistance level at the top of the channel it had been in since Dec. 29, and today that breach has been confirmed,” Donoso said
Offshore investors in the Chilean peso forwards market reduced bets against the currency to $4.6 billion on Feb. 10 from $5 billion on Feb. 9.
Chile’s central bank probably will keep the benchmark interest rate unchanged today after booming retail sales and a drop in the jobless rate reduced the scope for a repeat of last month’s unexpected rate cut.
Policy makers, led by central bank President Rodrigo Vergara, will keep the overnight rate at 5 percent, according to the median estimate of 20 analysts surveyed by Bloomberg. The bank will announce its decision after 6 p.m. local time.
To contact the reporter on this story: Sebastian Boyd in Santiago at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com