Chile Forum

greg~judy wrote:Meanwhile... g~j can (still - only) continue to whine about buying less wine (at 477 Cdn)

greg~judy wrote:

greg~judy wrote:Meanwhile... g~j can (still - only) continue to whine about buying less wine (at 477 Cdn)

USD = 470
CDN = 461

Chile’s peso climbed the most in three weeks, closing in on the level where it ended last year, as higher copper prices signaled an increased trade surplus for the metal’s top-producing nation.

The currency strengthened 0.9 percent, the most since March 31, to 469.25 per U.S. dollar from 473.48 yesterday. It broke through 470 per dollar for the first time since April 11 and climbed as high as 468.65. It ended last year at 468.

The peso has recovered almost all the ground it lost since the central bank announced on Jan. 3 plans to start buying $12 billion of U.S. currency. The currency has appreciated 3.7 percent since the end of January as the central bank raises interest rates to fight rising inflation expectations.

“The exchange rate is seeking the same levels we saw in January and the central bank can’t do much more to slow it,” said Patricio Nazal, chief executive officer of VanTrust Capital Corredores de Bolsa SA. “The fiscal debate in the U.S., the question of how much the U.S. government cuts spending, implies a decline in internal demand and a slower recovery, which means rates in the U.S. remain lower. Meanwhile inflation in emerging- market countries like ours is getting ever stronger. The exchange rate is only going in one direction.”

The Chilean peso will break through 465 per dollar and may reach 450 per dollar , he said.

Swap Yields Rise

The one-year swap rate climbed six basis points today to 5.71 percent, the highest in a week.

The peso may be 3 percent to 5 percent stronger were it not for the bank’s $50 million a day dollar purchases, bank President Jose De Gregorio said in a speech today in Santiago. The bank today paid an average of 469.86 pesos per dollar for $50 million.

While Chile’s central bank doesn’t rule out restricting capital inflows into Chile, it would already have done so were they needed, board member Sebastian Claro said today in an interview. Chile is a net exporter of capital, De Gregorio said.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell 0.9 percent to the lowest level since December 2009.

Copper rose for a second day as the dollar slumped and figures signaled manufacturing remains robust in China, the biggest buyer of Chilean copper. Copper for three-month delivery climbed 2.6 percent to $9,580 a metric ton on the London Metal Exchange. Copper for July delivery gained 2.5 percent to $4.3565 a pound in New York.

“Today’s rise is linked mostly to copper prices, which are having a strong rebound today,” said Flavio Magnasco, an economist at Banco Falabella in Santiago. “The euro is also helping.”

Foreign investors in the Chilean peso forwards market had a $1.6 billion bet that the peso would fall against the U.S. dollar as of April 18, according to central bank data.