Chile Peso Rises as Central Bank Damps Intervention Speculation

Chile’s peso appreciated after central bankers left interest rates unchanged for a 12th straight month and issued a statement that damped speculation they would intervene to stem the currency’s gains.

The peso appreciated 0.2 percent to 471.25 per U.S. dollar as of 10:26 a.m. in Santiago, on course for a 0.2 percent gain on the week. Copper, the country’s biggest export, rose 0.4 percent to $3.6770 a pound today on the Comex in New York. The metal fell as low as $3.5995 a pound on Jan. 16.

The central bank said in its statement yesterday that the peso had appreciated “slightly” against the dollar, language that indicated policy makers are less concerned about the currency’s advance than traders had anticipated, said Francisco Schneider, head of foreign currency wealth management at Celfin Capital SA. The central bank held the benchmark lending rate at 5 percent at the meeting.

“Copper has recovered, there was good data from the U.S. and foreign players are betting on the peso,” said Francisco Schneider, head of foreign currency wealth management at Celfin Capital SA. “Also, the central bank communique was lackluster and didn’t show much concern about the exchange rate.”

The currency retreated from a three-month high of 469.1 on Jan. 8 after Finance Minister Felipe Larrain said the government was “concerned” about the gains, fueling speculation that the central bank may start buying dollars to slow the advance.

Traders may try to drive the currency through 470 per dollar following the central bank’s statement, Schneider said.

International investors in the Chilean peso forwards market cut their bets against the currency by $6.5 billion in two months to a 16-month of $2.7 billion on Jan. 15. They increased bets against the peso by $209 million to $2.9 billion on Jan. 16, according to data published today by the central bank.

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