Chile’s Peso Weakens as China Housing Caution Cuts Copper Price
Chile’s peso weakened as copper, the country’s biggest export, declined after China signaled it would keep curbs on housing sales.
The peso fell 0.5 percent to 485.68 per U.S. dollar as of 9:53 a.m. in Santiago, from 483.1 yesterday.
China’s Premier Wen Jiabao said today that relaxing limits on the housing market may cause “chaos.” The New York-based Copper Development Association says construction generates about 40 percent of demand for the metal, used in pipes and wiring. Copper accounts for more than half of Chile’s exports and the price of the metal affects flows of dollars into the country.
“Today should have been a rally day, but the Chinese premier spoke in the morning and said house prices were unreasonable,” said Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago. “That clouded the outlook. It’s killing commodities and copper is a key driver.”
Copper for May delivery slid as much as 1.4 percent to $3.847 a pound on the Comex in New York.
Offshore investors in the Chilean peso forwards market cut their short position in the currency to $5.5 billion on March 12. They had a $5.8 billion short position on March 8, the biggest since the start of the year.
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