Chile Peso Rises to 19-Month High as Inflation Exceeds Forecast

Chile’s peso rallied to its strongest level in 19 months as a report showed consumer prices rose more than forecast, spurring speculation that the central bank will increase borrowing costs.

The currency appreciated 0.4 percent to 467.05 per U.S. dollar at the close in Santiago, the strongest level since September 2011.

“Inflation was higher than expected,” Francisca Roa, an analyst at Netgociando SA, said in a telephone interview. “If that trend were to continue, it would set up the scenario for a rate increase.”

Consumer prices advanced 0.4 percent in March from a month earlier, the fastest pace in five months, the National Statistics Institute reported today. The pace was faster than the 0.3 percent median forecast of economists surveyed by Bloomberg. Annual inflation accelerated to 1.5 percent from 1.3 percent in February.

The two-year breakeven rate, the difference between fixed and inflation-linked swap rates and a reflection of the average pace of consumer prices projected by traders during the period, rose one basis points, or 0.01 percentage point, to 2.58 percent, ending three days of losses.

The economy grew 3.8 percent in February from a year earlier after 6.7 percent expansion in the prior month, the central bank reported April 5. The median forecast of economists surveyed by Bloomberg was for 4.8 percent growth.

Futures prices for copper, Chile’s main export, rose 0.8 percent to $3.3715 per pound in New York today.

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