Chile Peso’s International Investor Shorts Fall to Six-Week Low

International investors had their smallest bet against the Chilean peso in six weeks as the central bank said the currency wasn’t yet strong enough for it to intervene.

Global investors had an $8.2 billion short peso position Sept. 28, the lowest level since Aug. 14, data published today by the central bank showed. They cut their short position from $10.1 billion on Sept. 13. A short is a wager a currency may decline.

Foreign investors reduced their bets against the currency as central bank President Rodrigo Vergara said last week that while policy makers were prepared to enter the market against the currency, the peso wasn’t yet strong enough to justify such a measure. Intervention in the currency would be exceptional, policy maker Sebastian Claro said at a conference today.

“There has been about $2 billion coming in,” said Felipe Alarcon, an economist at Banco de Credito e Inversiones in Santiago. “They are betting again after the excellent data of last week, betting on the economy and that the central bank won’t intervene until December.”

Chile’s manufacturing index rose more than analysts forecast in August and unemployment unexpectedly fell, the National Statistics Institute reported Sept. 28. The economy grew 6 percent in August from a year earlier after a 5.3 percent advance in the prior month, according to the median forecast of 12 economists surveyed by Bloomberg before a report Oct. 5.

The currency is approaching a level at which the central bank would consider intervening to stem its advance, Vergara told a conference in Santiago on Sept. 28.

The peso depreciated 0.1 percent to 473.15 per dollar today. It has rallied 9.8 percent this year.

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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