Chile’s peso dropped on concern a global economic slowdown will reduce demand for copper, the country’s main export.
The peso weakened 0.2 percent to 480.52 per dollar at the close in Santiago. The currency has traded between 472 per dollar and 483 per dollar since Oct. 23.
Concern the expansion will falter in the global economy is mounting as the U.S. faces more than $600 billion in mandated spending cuts and tax increases starting Jan. 1, known as the fiscal cliff, unless President Barack Obama and congress agree on a deficit-reduction plan.
“There are arguments in the domestic economy to support a strong peso,” including stable interest rates, said Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago. “Yet offshore there’s the U.S fiscal cliff, the sagas of Greece and Spain and weakening copper. Those things play a against each other.”
Chilean policy makers will probably leave the overnight rate unchanged tomorrow at 5 percent, according to the mean estimate of 13 economists surveyed by Bloomberg.
The peso has appreciated 8.1 percent this year, the second-biggest gainer among emerging-market currencies after the Hungarian forint, as the central bank held its benchmark interest rate unchanged since January.
The country is the biggest copper producer in the world and the metal, which made up 60.7 percent of the country’s exports last month, reached a 12-week intraday low on Nov. 9.
The one-year interest-rate swap rate rose two basis points, or 0.02 percentage point, to 5 percent today.