Chile Peso Touches 12-Week Low as Fiscal Cliff Spurs Refuge Bid
Chile’s peso touched a 12-week low on speculation U.S. budget wrangling will weigh on global economic prospects and sap demand for emerging-market assets.
The peso depreciated 0.1 percent to 484.45 per U.S. dollar at 10:57 a.m. in Santiago after touching 486, the weakest intraday level since Aug. 20. The currency has fallen 1 percent this week, its biggest drop since the five days ended Oct. 26.
Investors sought refuge in the dollar before the opening round of talks today between President Barack Obama and congressional leaders to avoid $607 billion in tax increases and spending cuts, known as the fiscal cliff. The U.S. is Chile’s biggest export destination after China. Copper, which makes up most of Chile’s exports, traded at almost a two-month low.
“Markets haven’t stopped falling, and that has dragged down commodities and currencies as well,” said Eugenio Cortes, the head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago. “The Chilean peso is no exception. The market is concerned about everything Obama faces in negotiations with the Republicans and the tax rises. An increase in taxes would be a strong blow to the U.S. economy.”
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