May 28 (Bloomberg) -- Chile’s peso dropped to a four-month low amid reduced trading volume after offshore investors placed the biggest bet against the currency on record, overshadowing a copper rally.
The currency dropped for a fourth day, depreciating 0.6 percent to 512.54 per dollar after touching 512.55, the weakest level since Jan. 9. The peso earlier rose as much as 0.4 percent to 507.30. Volume reached $1.4 million, down from $1.6 million on May 25 according to the electronic stock exchange. U.S. markets were closed for a holiday.
Offshore investors in the Chilean peso forwards market increased their short peso position to $10.2 billion on May 24, passing $10 billion for the first time since the central bank began publishing the data in 2008. Local investors had a $17.4 billion long peso position.
“The dollar was at 507, but we have gone back to the levels of last week,” said Alejandro Araya, a currency trader at Banco Santander Chile in Santiago. “It has been a movement with little flow behind it. Volumes are half that of a normal day.”
Copper for July delivery rose as much as 1.4 percent to $3.4975 a pound in New York on eased concern Greece will exit the euro and worsen Europe’s turmoil. Stocks rose in Europe and Asia, and the euro appreciated to $1.2541.
“The U.S. is closed, so any flows today have been weighing more than the fundamentals,” said Andres de la Cerda, a money markets trader at Bice Inversiones in Santiago. “Everything else was improving, and the peso fell.”
To contact the reporter on this story: Sebastian Boyd in Santiago at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com