Chile’s peso touched a five-month low against Mexico’s currency on speculation the central bank in Santiago will refrain from boosting interest rates for a longer period that its Mexican counterpart.
Chile’s currency was little changed at 37.2902 per Mexican peso at the close in Santiago after touching 37.3770, the weakest on an intraday basis since July 5. The Chilean peso depreciated 0.2 percent to 475.15 per U.S. dollar.
Swap rates imply Chile’s central bank will leave its target lending rate at 5 percent for the next six months, according to Banco de Chile calculations. Traders in Mexican swaps were projecting at the end of last month a 52 percent chance of an increase in the 4.50 percent benchmark to 5 percent in March, according to data compiled by Bloomberg. Mexican President Enrique Pena Nieto has signaled he will adopt measures to boost the nation’s economic growth.
“Mexico’s growth story is very resilient, and there are hopes for the reform agenda,” said Alejandro Cuadrado, a foreign-exchange strategist at Banco Bilbao Vizcaya Argentaria SA in New York.
While the Chilean and Mexican pesos are the strongest major currencies in the region this year, Chile’s currency has weakened 0.1 percent in the fourth quarter while Mexico’s has risen 1 percent.
International investors in the Chilean peso forwards market had a $5.4 billion short peso position on Dec. 17, the lowest since March, according to data published today by the central bank. A short is a bet an asset will lose value.