July 6 (Bloomberg) -- Chile’s peso climbed for a second day as pessimism about the European debt crisis waned a day after Moody’s Investors Service cut Portugal’s credit rating to junk.
The peso advanced 0.1 percent to 463.95 per dollar from 464.56 yesterday, recovering from losses earlier in the day when it was down as much as 0.4 percent.
“The whole market got worried initially about Portugal and now people are thinking maybe it will be possible to decouple from the minor European countries, though it’s still early for that,” Dirk Heller, head of Latin America local markets strategy for Citigroup Global Markets Inc., said in a phone interview.
The Chilean government’s announcement yesterday to create a $4 billion education fund may continue to strengthen the peso as some of the financing would come from copper profits and offshore savings held in U.S. dollars, said Cesar Perez, a managing director at Celfin Capital SA in Santiago.
“When you actually move those proceeds back into Chile, you’re going to move the exchange rate,” he said.
Chile’s central bank paid an average of 466.26 pesos per dollar for $50 million today, as part of a $12 billion effort to limit the peso’s gains.
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