Chile's Peso Climbs to Nine-Month High on U.S. Rate Speculation

  • Peso rose above technical level seen as harbinger for gains
  • Atlanta Fed President says patience on U.S. rates is warranted

The Chilean peso strengthened to its highest level in nine months as speculation the U.S. central bank will be in no rush to raise borrowing costs triggered sales of dollars to limit losses.

The peso advanced 1 percent to 664.1 per dollar, its strongest close since July 24, and the biggest among emerging-market currencies. The dollar has slumped 4.3 percent this year, fueled by cautious comments from the Federal Reserve regarding the pace of rate increases in the U.S.

Atlanta Fed President Dennis Lockhart said patience on U.S. rates is warranted and the central bank has more work to do on inflation, following a report showing consumer prices rose less than forecast. The data spurred gains in the local currency, which broke a key technical resistance level of 666 per dollar, according to Eugenio Cortes, head of currency forwards trading at Euroamerica Corredores de Bolsa SA.

"The break of 666 activated more stop-loss trades on the dollar," Cortes said. "The market was trying to hold the dollar in the 667 to 669 zone, but it couldn’t hold it there."

The peso has gained 10 percent from an almost 13-year low in January, the most in Latin America after the Brazilian real’s advance.

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