Chile’s peso rose to a four-month high on speculation the U.S. debt impasse’s disruption of the economy will spur the Federal Reserve to maintain a stimulus program that supports the South American nation’s assets.
The currency appreciated 0.4 percent to 493.97 per U.S. dollar at the close in Santiago, the strongest level on a closing basis since June 14.
“The whole problem with the shutdown and the debt-ceiling debate has put a blanket of doubt over the positive story in the U.S. and the tapering of stimulus,” said Alejandro Araya, a foreign-exchange trader at Banco Santander Chile in Santiago. “It’s all reset to zero. We’ve gone back to May. Tapering is six months away.”
Chile’s central bank has maintained its target lending rate since January 2012 at 5 percent, compared with the U.S. benchmark of zero to 0.25 percent, making the Andean nation’s assets attractive to international investors.
Policy makers will hold borrowing costs steady today, according to the median forecast of 19 economists surveyed by Bloomberg. Central bank director Joaquin Vial said in an Oct. 11 interview that there is no rush to change the target rate.
The net short peso position of foreign investors in the country’s forwards market fell to a five-month low of $6.4 billion on Oct. 15.