Chile’s peso depreciated the most in three weeks amid speculation that the central bank will intervene to weaken the currency at its Jan. 17 meeting.
Speculation that the central bank will act to slow the appreciation of the peso, as it did by purchasing $12 billion in 2011, has increased after the currency reached 469.1 per dollar on Jan. 8. Copper, Chile’s top export, dropped to a two-week low today as a slump in U.S. equities sparked concern the economic recovery may slow.
“It’s the noise about intervention from the central bank,” said Francisco Schneider, head of foreign currency trading at Celfin Capital SA in Santiago, explaining today’s peso decline. “This week is important, with the central bank meeting on Thursday. The market is cautious. No one wants to be short dollars.”
The peso has traded within a range of 475 to 469 per dollar since the beginning of this month as concern that the central bank will buy dollars to weaken the currency prevented it from appreciating.
Finance Minister Felipe Larrain said on Jan. 8 the government shared exporters’ concern about the appreciation of the peso, which has gained 4 percent in the past six months.
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