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Chilean Peso Posts Weekly Advance as Stimulus View Boosts Copper

Chile’s peso posted a weekly gain as speculation authorities in the U.S. and China will do more to promote growth boosted the price of copper, the Latin American nation’s biggest export.

The currency has appreciated 0.5 percent since Aug. 17 after declining 0.1 percent to 481.04 per dollar at the close in Santiago. The peso has gained 8 percent this year, the best performance among all of the world’s currencies tracked by Bloomberg after the Hungarian forint.

“There is speculation there will be more money and that emerging markets will benefit, but it’s just speculation,” Eugenio Cortes, the head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago, said in a phone interview. “The real figures don’t allow for so much optimism.”

Chilean policy makers highlighted the peso’s appreciation last week, fueling speculation the central bank will revive a dollar-buying program while keeping the benchmark interest rate at 5 percent for a seventh month.

The Bloomberg JPMorgan Latin American Currency Index has dropped 0.2 percent this week. Futures on copper, which makes up more than half of Chile’s exports, slid 0.2 percent in New York today, paring the weekly gain to 1.8 percent.

The peso fell today as two officials said European Central Bank President Mario Draghi may await a German ruling on the legality of Europe’s permanent bailout fund before announcing details of his plan to buy government bonds. The officials spoke on condition of anonymity because the deliberations aren’t public.

Bernanke View

U.S. stocks rallied after Federal Reserve Chairman Ben S. Bernanke said in an Aug. 22 letter to the chairman of the House Oversight and Government Reform Committee that “there is scope for further action” to spur the economy. The People’s Bank of China pumped a net 278 billion yuan ($43.7 billion) into the financial system this week using money-market operations, the biggest cash injection since January.

International investors in the Chilean peso forwards market had an $8.6 billion bet against the peso on Aug. 22. Local investors, which excludes banks and brokers, had a $17 billion long peso position.

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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