Aug. 13 (Bloomberg) -- Chile’s peso fell for a second day as copper prices retreated after Japanese economic growth trailed estimates and Bank of America Corp. cut its forecast for expansion in China.
The peso dropped 0.6 percent to 481.86 pesos per U.S. dollar. The currency has weakened 1.4 percent from an 11-month high of 474.98 per dollar on Aug. 9. Copper for September delivery sank as much as 1.5 percent on the Comex in New York.
Japan’s gross domestic product expanded an annualized 1.4 percent in the second quarter, less than economists surveyed by Bloomberg had projected, as the rebound fueled by post-earthquake reconstruction waned. Bank of America joined Deutsche Bank AG and Barclays Plc in reducing its growth forecast for China. Japan and China are the two biggest buyers of Chilean copper, which accounts for more than half the Andean country’s exports.
“It’s the decline of copper and a lack of momentum carrying over from Friday,” said Eduardo Kutscher, a trader at Celfin Capital SA in Santiago. The peso weakened 0.9 percent on Aug. 10.
Bank of America now expects China’s economy to grow 7.7 percent this year instead of the 8 percent expansion that it previously forecast.
International investors in the Chilean peso forwards market had a $7.7 billion short peso position Aug. 9, up from the three-month low of $7.6 billion Aug. 8, according to data published by the central bank.
“Up until Friday there had been a lot of dollar selling and the peso had got a little out of line with fundamentals and with other emerging-market currencies,” said Eugenio Cortes, head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago. “Some reversion made sense.”
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