Chile’s Peso Rises to Four-Month High on China Factory Growth

Chile’s peso climbed to a four-month high after a report showed manufacturing in China, the biggest market for the South American nation’s exports, expanded at the fastest pace in two years.

The currency appreciated 0.2 percent to 470.33 per U.S. dollar at the close in Santiago, the strongest level on a closing basis since Sept. 25. The peso extended its January gain to 1.9 percent, the biggest among major Latin American currencies tracked by Bloomberg.

Concern that Chile’s central bank or government may try to weaken the currency has prevented it from breaking through 470 since Jan. 8. The peso reached 469.10 that day before closing weaker as Finance Minister Felipe Larrain said its appreciation is making exporters less competitive.

Below 470.5 there is “concern about heading into the danger zone,” Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago, said in a phone interview. “Stronger than that level, the market is more cautious because of a possible reaction from the government or central bank.”

International investors cut their bets against the peso in the forwards market to $1.6 billion on Jan. 22, the lowest level since Sept. 12, 2011, according to data published by the central bank today.

The preliminary reading of Markit Economics and HSBC Holdings Plc’s China purchasing managers index was 51.9 in January, compared with the 51.5 final reading for December and the 51.7 median estimate of 17 analysts surveyed by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.