Chile Peso Falls to Two-Week Low on Copper as Volatility Surges

Chile’s peso fell to its weakest level almost three weeks as copper slumped amid a rout in commodities and emerging markets.

The peso weakened 0.9 percent to 693.82 per dollar at 1:15 p.m. in Santiago, the lowest since Oct. 1. Thirty-day historical volatility, a measure of price swings, reached 12.16 percent, the highest this month. Currencies in developing nations dropped to a two-week low as a slide in Chinese shares added to concern the economy at the world’s biggest raw-materials consumer is slowing further.

Chile’s peso has weakened 16 percent in 2015, as copper lost almost a quarter of its value. The decline pressured the central bank to raise its key interest rate last week to counter inflationary pressures from the weaker currency.

Peso's 30-day volatility trending higher
Peso's 30-day volatility trending higher

"The peso’s volatility is here to stay," Raul Lopez, a currency trader at Banco Penta, said from Santiago. "Swings of more than 9 or 10 pesos per dollar between the open and close are becoming more frequent. It will all hinge on the quality of the local data."

Local economists have cut economic growth estimates for this year to 2 percent this month from 2.6 percent at the beginning of the year, according to the central bank. The central banks of Colombia and Peru had raised rates the previous month.

Data out of China this week showed the economy grew at the slowest pace since 2009 in the third quarter, potentially damping the country’s demand for imports. Japan said imports tumbled more than 11 percent in September, following similarly weak data from Germany. The global growth concerns are putting a dent in a rally across emerging markets this month, spurred partly by waning bets for a Federal Reserve interest-rate cut this year.

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