Chile Peso Gains as German Confidence and Bernanke Buoy Copper

Chile’s peso strengthened for the first time in seven trading days as copper rose on signs of faster growth in Germany and the U.S., two of the world’s four largest economies.

The currency gained 0.6 percent to 486.19 per U.S. dollar as of 9:58 a.m. in Santiago from 489.05 on March 23. Copper, which accounts for more than half of Chile’s exports, climbed as much as 1.4 percent in New York.

German business confidence reached an eight-month high and Chancellor Angela Merkel said she may back plans for two European rescue funds to run concurrently. Federal Reserve Chairman Ben S. Bernanke said that while he’s encouraged by the declining U.S. unemployment rate, monetary policy needs to remain accommodative.

“Bernanke spoke and the market liked it, commodities are up, yields in Europe and the U.S. are down,” said Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago. “It’s a beautiful morning, the world is positive and we should see selling of dollars today. The question is whether the peso can go back through 486.5, which was a strong resistance level in previous sessions.”

The Munich-based Ifo institute’s business climate index increased to 109.8 from a revised 109.7 in February. Reports this week may show manufacturers in the U.S. received more orders for durable goods and consumer purchases climbed the most in five months. A gauge of leading U.S. economic indicators increased the most in 11 months, according to figures last week.

Offshore investors in the Chilean peso forwards market had a net short position of $5.4 billion on March 22, little changed from March 21, according to central bank data. The long pesos position of local investors versus banks grew to $17 billion, the highest since July.

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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