Chilean Peso Declines on Weaker Copper, Central Bank Spot Sales

Bloomberg Jan 26--Chile’s peso weakened as copper, the South American country’s biggest export, declined and the central bank bought U.S. dollars.

The peso slid 0.1 percent to 492.7 per U.S. dollar from yesterday’s close of 492.15.

Copper for March delivery fell as much as 3.1 percent in New York after India raised interest rates. The MSCI World Index fell 0.6 percent after the U.K. economy unexpectedly shrank and concern grew that Spanish banks need more capital. Chile’s central bank bought $50 million in the spot market at an average of 492.44 as part of a $12 billion effort to weaken the peso.

“The peso started weaker, basically because of the decline of stocks and commodities,” said Cristian Donoso, a currency trader at Banchile Inversiones in Santiago. “Since then the U.S. consumer confidence data came out better than expected and we’ve seen more risk taking locally.”

U.S. consumer confidence grew more than forecast in January to the highest level in eight months, according to the Conference Board.

Foreign investors in the forwards market had a $2.1 billion bet that the Chilean peso would fall against the dollar on Jan. 21, according to data published today by the central bank. Before the central bank announced its dollar-buying plan, foreigners had a $1.7 billion bet on the peso to beat the dollar.