April 17 (Bloomberg) -- Chile’s peso fell the most this year as the price of copper, the country’s biggest export, plunged on a weaker outlook for global economic growth.
The currency depreciated 0.6 percent to 474.92 per U.S dollar at the close in Santiago, the weakest level since Jan. 16. The decline was the biggest since Dec. 21. The peso has dropped 0.8 percent since the end of January while copper has tumbled 15 percent.
“The gap with copper is too big and we have a selling bias,” Alejandro Cuadrado, a currency strategist at Banco Bilbao Vizcaya Argentaria SA, said in a telephone interview from New York. “This is one of our least favorite currencies in Latin America at this juncture.”
The global economy will expand 3.3 percent this year, slower than forecast in January, the International Monetary Fund reported yesterday. The IMF cut the estimate for growth in China, the biggest buyer of Chile’s copper, to 8 percent.
Copper futures fell the most since December 2011, dropping 3.7 percent to $3.2010 per pound, the lowest level in 18 months. Copper, used in cars and new buildings, makes up almost half of Chile’s exports.
The peso has slid 1.7 percent from a 19-month high reached April 8. The sell-off may curb speculation that the central bank will intervene to weaken the currency, Cuadrado said.
Local investors in the Chilean peso forwards market, a category that excludes banks and is dominated by pension funds, reduced their net bet on the currency to $10.9 billion on April 15 from $13.4 billion at the end of March, according to central bank data published today.
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