Chile’s peso rose for the first time in four days as stress-test results bolstered confidence in Spain’s banking system, spurring demand for higher-yielding assets including emerging-market currencies.
The peso gained 0.4 percent to 473 per U.S. dollar as of 12:24 p.m. in Santiago. Copper, Chile’s main export, rose as much as 1.1 percent to $3.798 a pound on the Comex in New York and the euro climbed 0.5 percent. Of 25 emerging-market currencies tracked by Bloomberg, 16 rose today.
Stress tests on Spanish banks showed a capital deficit of 59.3 billion euros ($76.6 billion), less than the 100 billion euros agreed to as part of a bailout. The peso would appreciate more were it not for concern the central bank may intervene to weaken the currency, said Ronald Volpi, the head of spot currency trading at EuroAmerica Corredores de Bolsa SA in Santiago.
“With copper at this level and the euro at this level we should be nearer 470 per dollar,” Volpi said. “But there’s a lot of noise around intervention and banks are buying dollars today.”
Central bank President Rodrigo Vergara said on Sept. 28 that the bank was prepared to act to weaken the currency if it was justified. The central bank would intervene if the peso appreciated to a level that was out of line with fundamental drivers for a long time, he said. The peso is nearing the level that would prompt the bank to consider intervening, he said.
Chile’s peso has appreciated 9.9 percent, more than any other currency in the region, this year, propelled by a stable 5 percent central bank interest rate and economic growth that has exceeded economists’ estimates.
Chile’s manufacturing index rose more than forecast in August and unemployment unexpectedly fell, the National Statistics Institute reported on Sept. 28.
The median forecast of 11 economists in a Bloomberg survey is that the economy grew 5.8 percent in August from a year earlier. The central bank will publish the data on its website on Oct. 5.
“There’s no need for the central bank to cut rates,” said Felipe Hernandez, an economist at Royal Bank of Scotland Group Plc. in Stamford, Connecticut. “The interest-rate differential between the U.S. and Chile still favors the strength of the Chilean peso.”