BLBG:Peso Strengthens to Four-Month High as Copper Rises on Fed: Santiago Mover
Chile’s peso rose to the strongest level since September as the U.S. Federal Reserve’s pledge to keep borrowing costs low spurred demand for commodities and higher-yielding assets.
The currency strengthened 1.2 percent to 486.65 per U.S. from 492.4 yesterday, after earlier touching 484.18 per dollar. The peso hadn’t advanced beyond 486 per dollar since Sept. 20. It was the weakest emerging-market currency tracked by Bloomberg two days ago. The Bloomberg JPMorgan Latin American Currency Index gained 0.5 percent.
Copper, which makes up half the country’s exports, climbed as much as 2.1 percent to $3.9105 a pound in New York. Fed Chairman Ben S. Bernanke said policy makers are considering buying bonds to boost growth and extended a pledge to keep interest rates low through at least late 2014.
“The peso is rebounding after the dovish Fed,” said Katia Diaz, an economist at 4Cast Inc. in New York. “That helped the peso break the 200-day moving average. If positive momentum in the euro persists it could propel the peso to 474 per dollar, but we don’t see that move, if it happens, being very long- lived.”
Investors have been using the Chilean peso to express views on global growth, according to Alvaro Vivanco, a strategist at Banco Bilbao Vizcaya Argentaria SA in New York. The peso often rises and falls in line with the price of copper, used in new homes and cars.
Offshore investors reduced bets against the currency in the Chilean peso forwards market to $4.5 billion on Jan. 24, the lowest since Nov. 3.
Chilean interest rate swaps fell on the Fed’s news. The two-year swap rate dropped six basis points to 4.37 percent. The one-year fell four basis points to 4.46 percent.
To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
