Chilean Peso Strengthens as Bernanke Won’t Rule Out Stimulus

Chile’s peso appreciated as Federal Reserve Chairman Ben S. Bernanke said he wouldn’t rule out further stimulus to lower unemployment in the world’s biggest economy.

The peso gained 0.1 percent to 480.58 per dollar today. The currency opened at a one-week high of 478.8 per dollar and dropped as far as 481.17 per dollar as Bernanke’s comments were first published before appreciating again. The peso has strengthened 0.4 percent this month and is the strongest currency in the world this year, rising 8.1 percent.

Stagnation in the U.S. labor market is a “grave concern,” Bernanke said, two weeks before a meeting of the Federal Open Market Committee.

“It’s been a chaotic session,” said Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago. “The market started optimistic, it turned around as Bernanke spoke and now people are thinking there might be stimulus in a few weeks.”

“The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant,” Bernanke said today in a speech to central bankers and economists at an annual forum in Jackson Hole, Wyoming.

All five Chilean central bank policy makers referred to the appreciation of the peso at their Aug. 16 rate-setting meeting, minutes published today showed.

International investors in the Chilean peso forwards market had a $9.6 billion short position in the peso on Aug. 29, the central bank said today. That’s a $1 billion increase from a week earlier.

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